Maybe you were doing fine financially. Or, like millions of Americans, perhaps you were already living paycheck-to-paycheck.
Either way, the pandemic certainly didn’t help your financial situation.
While the country is slowly recovering, that can’t come fast enough for many people buried under a growing mountain of debt. And, as you probably already know, it’s tough to stay motivated when you’re constantly worrying about how you will make ends meet.
Fear not: There is a way out.
The first thing you need to do is take a deep breath and face the music. You can’t get out of debt if you don’t know how much you owe. So, grab a pen and paper or use a budgeting app and make a list of all your debts. Remember to include the creditor’s name, interest rate, and minimum payment for each debt. Once you’ve got a clear picture of your total debt load, you can start to figure out how to tackle it.
Budgeting may not be the most exciting thing in the world, but getting out of debt is essential, and you can only do that with a budget in place. Look at your monthly income and expenses and see where to cut back. Maybe you can ditch that gym membership you never use or cancel a subscription service you forgot you had — every little bit counts. Once you’ve freed up some cash, create a budget that allows you to live within your means and allocate as much money as possible towards paying off your debts.
This may sound scary, but negotiating with creditors can be a game-changer. Call them up and explain your situation. They may be willing to work with you to develop a payment plan that fits your budget. You can also ask for a lower interest rate, saving you thousands in the long run.
Now it’s time to get serious. Two popular methods for prioritizing your debts are the debt avalanche method and the debt snowball method. The debt avalanche method involves tackling your debts in order of interest rate, starting with the debt with the highest interest rate and working your way down. The debt snowball method involves prioritizing your debts based on balance, starting with the smallest balance and working your way up.
If you’re struggling to make ends meet, it might be time to consider increasing your income. Easier said than done, right? This could mean finding a part-time job, selling items you no longer need, or finding ways to monetize a hobby or skill you have. Every little bit helps when it comes to paying off debt.
Paying off debt is no walk in the park, but staying motivated and focused on your goals is essential. Celebrate your progress along the way (but don’t blow your budget doing so!). And surround yourself with people who support your goals.
Getting out of debt can feel like you have to climb an impossibly high mountain – it can be hard to see the peak when you’re at the bottom. That’s why this process also takes a hefty amount of perseverance and dedication. If you’re looking for ideas for getting out of debt, connect with the Van Horn Law Group. After all, every journey – even the seemingly impossible ones – begins by taking the first step.
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