Credit card debt is getting out of control, and many of those who howe thousands of pounds end up in denial about their situation and continue to rack up even more debt. It’s never too late to get yourself out from underneath your mountain of debt. Sometimes even the smallest step in the right direction is all that it takes to start you on your way.
#1. List Your Debts – Open Microsoft Excel, or grab a pen and a piece of paper if it suits your style, and start getting a handle on your debt by making a list of what you owe. Write down, or type in, how much money you owe each bank, along with the APR (annual percentage rate). It’s also a good idea to take note of the minimum payment amount that you have to pay each month. Once all your debts are together, give it a minute to sink in, but don’t panic. Knowing exactly how much you owe to who is the first step to living debt-free.
#2. Set Up Reachable Goals – The next step is to set up periodic goals, and its good to get a handle on setting goals for financial stability. The end goal should, of course, be paying off all your debt, but in the meantime what you want to do is set monthly goals toward the end goal. Say, for example, if you owe £10,000 and you set a monthly goal of paying off £500 a month. The important thing is to figure out how much money per month you can devote to paying off your debt so that you set attainable goals.
3. Snowball Your Payments – Once you finish paying off one debt, use that extra money you freed up to throw at paying off other debts. This way you are able to pay off your debts faster without getting stuck paying extra money due to interest rates.
#4. Trade in Big Ticket Items – It’s time to tighten up your bootstraps, as they say. Your goal is to pay off your debt, and if you have a new, shiny car that’s worth £13,000 and you can find an acceptable car for sale at £9,000, then trade in the new car. You won’t have to make a car payment, plus you can throw the extra £4,000 you got from the trade towards paying off your debt.
#5. Sell What You Can – Chances are that your flat or house is full of stuff you don’t use anymore. These might not be big ticket items, but you can still make some money off of them. Hold a yard sale, or try listing them for sale online. Either way, through those profits towards your debt payment too.
#6. Put in Extra Hours – Now is the time to work extra hard so that you can make your way to financial independence. Volunteer for extra shifts, put in a few extra hours at the office, do whatever it is that you can do to earn more money.
#7. Reap the Rewards – Celebrate every time you hit your monthly goal. Just try to keep it reasonable, maybe by taking a day at the park or buying one of those expensive coffee drinks that are temporarily out of your budget. You deserve it.
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