Some degree of debt is normal–whether it’s money owed on a house, a couple of credit cards or a student loan. However, there are warning signs that your debt may be getting out of hand. These include making only the minimum payment on maxed-out credit cards or not paying your bills on time. If this sounds familiar, here are four steps you can take to tackle your debt head-on:
1. See what you can cut.
Break out the pencil, paper and calculator (or the financial management software) and determine the best way to retain more money than you send out each month. Some expenses, such as mortgages, medical bills and student loans, are difficult to reduce. Others, like credit card bills, can be decreased by transferring high-interest balances to a card with a 0% introductory rate and paying the debt off before the introductory rate expires.
Find out more about the 0% APR Visa Platinum Card available through The First.
2. Stop blaming decaf lattes.
We’ve all heard that we could save $5 a day by brewing our coffee and tea at home, but if you’re carrying tens of thousands of dollars in debt, your local barista probably isn’t the main culprit. Understanding why you’re in debt and identifying ways to control your spending are important steps toward working your way back into The Black. For many people, the best way to decrease debt is to stop adding to it.
3. Get assistance.
If bad spending habits are fueling your debt, try enlisting outside help. Contact a free or low-cost consumer credit counseling agency or talk to a friend or relative with a flair for financial management. In cases of compulsive spending, consulting a licensed therapist or joining a 12-step program may be the answer.
4. Consider a second job.
This strategy has two positives going for it. 1: You’ll bring home more income. 2: You won’t have time to shop. Working a second job really should be used as a last resort, however, since fatigue may affect your ability to perform your primary job effectively.
Getting out of debt can be difficult, but understanding what you owe and mapping out a strategy for paying it back can help you achieve financial stability and greater peace of mind.
Have you ever conquered a large amount of debt? Tell us what worked for you in the Comments section.