If you’re struggling with debt, it can often feel like you’ve got nowhere to turn and you have nothing you can do. The truth is, though, that there are lots of ways that you can pull yourself out of excessive debt. While some of these are going to require some hard work and dedication, it’ll be worth it in the end to be debt-free and financially healthy once more.
Here are six of the most effective methods for getting back into the black.
1. Create a Budget and Stick to It
First things first: if you’ve ended up in debt, you have to acknowledge that you did so because you spent more than you can afford. Whether it was because of poor planning of because of an emergency expenditure is irrelevant at this point: you’ve got to rebuild either way.
The first step is to go over all your outstanding debt, your expenditures, and your income. Then, you need to take all this information and set up a budget that you can stick to without fail.
2. Cut Out Extra Costs
You’ve got to start paying down your debt, and in order to do that, you need some extra cash to throw at it. If you’re already leveraged to the hilt and your personal finances are straining to burst, one strategy you can employ is to trim the fat on your discretionary spending.
Scaling back on things you can do without, such as streaming subscriptions or gym memberships, can free up the cash you need to make those minimum payments on your debt. Downgrading your cable package or mobile phone plan, spending less money on eating out, or other similar choices can also yield some extra cash as well.
3. Build Up Your Income to Better Levels
Debt occurs when you spend more cash every month than you bring in. That’s just a fact. Cutting back on the amount of money you spend every month can certainly help turn that around, but you can bridge that gap even more if you increase your income as well.
While this sounds easier said than done, there are plenty of ways to bank some extra cash. Some of these will require you to hustle a bit harder, either by picking up some overtime at work or selling some stuff over the internet. But remember: the whole goal is to free yourself from debt. Let that be your motivator.
4. Eliminate Bad Credit by Paying More than the Minimum
Struggling with debt often means scraping together just enough to make that minimum monthly payment on your credit card or personal loans. While this will keep the wolves from your door, paying just the minimum every month is just prolonging your punishment thanks to sometimes excessively high interest rates.
If you can manage to pay even just a little more than your minimum payment, you can cut the time needed to be free of your debt by a considerable margin.
5. Consolidate Your Debt
Speaking of interest rates, one way to avoid paying through the nose is to consolidate multiple debt streams into one. If you have a number of personal loans or credit cards that you’ve maxed out, putting them together into one single loan can be less expensive in the long run if you can find one with a lower overall interest rate.
Additionally, it’s often a lot easier to make just one large monthly payment instead of half a dozen smaller ones — this way, you’ll run less of a risk of missing a payment and incurring fines and late fees.
6. Seek Expert Advice
Don’t ever hesitate to ask for help if you feel overwhelmed and unsure of what to do next. If you’ve been wracking your brain for ways to come up with some extra cash to pay down your debt but have yet to come up with any real working options, it may be time to turn to an expert.
Debt counseling services, many of which will help you at no cost, can aid in getting you on the straight and narrow when it comes to paying off bad credit and getting back to healthy levels of personal finance.
There’s No Easy Fix
Building up bad debt can happen almost overnight. The bad news is that it’ll take you a lot longer to dig yourself out of all that debt, but you’re not without options. As long as you keep your head about you, stick to a budget, and do what you can to reduce your expenses while increasing your income, you’ll be on the road to recovery before you know it.