I’m in debt. I’m hopeless. I’m done.
When you’re in massive debt, it’s easy to feel like you’re carrying the entire world on your shoulders. Perhaps debt collectors are calling you incessantly or even threatening to repossess an item you had used as collateral for a loan.
If it’s any consolation, you’re not alone. The average American has about $38,000 in personal debt.
However, being in debt isn’t a life sentence. Regardless of the amount of debt you have, you can gradually get out of it. You just need to devise a thorough plan.
In this article, we’re sharing expert debt management tips that can help you manage debt and reclaim your financial freedom.
Take Stock of Your Debt
When you start spiraling into debt, you can lose track of who you owe and how much. If you’re in this situation, the first thing to do is to take stock of your debt.
How many loans do you have? What’s the outstanding balance on these loans? What interest does each loan charge? How many of these loans have gone into collections?
If you don’t know the state of a particular loan, don’t be afraid to call the particular lender and inquire.
When you have a clear picture of just how much debt you have, you’ll be in a better position to create a debt management strategy that works.
Increase Your Income
There’s only one way out of debt: paying up what you owe.
Sure, there’s the option to file for bankruptcy, but there’s no guarantee your application will be approved, and even if it is, not all your debts will be discharged.
As such, your focus should be on settling your debt. And to do this, you need an income.
If you already have a job, now is the time to take up a second job. There are various jobs you can do during your part-time and supplement your primary income.
It’s also advisable to assess your lifestyle and find ways to reduce your expenses. For instance, if you live in a 2-bedroom rental, is there any chance you can move to a smaller unit?
In general, you want to increase your income while reducing your expenses. With a higher disposable income, you can use most of it to pay up your loans.
Choose a Debt Payment Strategy
It’s unlikely that you’ll have the financial muscle to pay off your loans at once. This is why you need to select a debt repayment strategy that works for your current financial situation.
You could opt to prioritize paying off the loans with the highest interest rate, since you stand to lose the most the longer these loans go unpaid.
Alternatively, you could resolve to prioritize the loans with the lowest balances and work your way up. Paying off a loan, however small, will give you the motivation you need to tackle the larger ones.
Or, you could just consolidate all your loans into a single, low-interest loan. This debt consolidation company can help you find a good consolidation loan offer.
I’m in Debt, I’ll Work My Way Out
I’m in debt, now what?
If that’s what you were wondering, by now you have certainly shifted your mindset. It’s understandable that debt can make you feel lost, but you need to be proactive. With this guide, you’re now in a better position to start your journey towards being debt-free.
Keep tabs on our blog for more tips on managing debt.