Easy credit, advertising, and lack of financial control are driving more and more people to take on debt, often to achieve consumer dreams that they can not afford at the moment. Other times, emergency situations can cause even the most financially stricken person to end up in debt.
In all cases, retaking the reins of financial life requires sacrifices and commitment. If you do not know where to start, we’ve listed some tips to get you out of the network as soon as possible.
Find out where your money goes
The first step to getting back in control of your financial life is to find out where every penny you earn or owe goes.
For a period of at least one month (ideally at least three), write down everything you spend, from the portion of car financing to coffee in the bakery. With these expenses in hand, split your spending between essentials and other expenses.
Once you figure out what your non-essentials are, it’s time to decide which of them you’re really willing to give up, or at least decrease. It’s no use saying you will not dine out until you pay the debt if you can not say no to friends and family. Review what is really important and only promise what you can accomplish. Otherwise, you may be frustrated quickly and do not reach your goal. If possible, talk to people who live with you, so they can not only understand during this phase, but also how to support you.
Make a budget
With your expenses in hand, it’s time to set how much of your salary goes to each of them. Make a budget for your spending and strive not to run away from it. When calculating, remember that your goal is to pay off debts, then put reasonable values to be met, but without wasting money. In order to be financially reassured, it takes some sacrifice.
Find out how much you should
This is the hardest part to look at: figuring out the size of the debt. Calculate everything you owe and find out exactly what interest you are paying. This will help you determine which situations are most urgent and how long it will take you to remove all the values.
Prioritize debt repayment
If you have more than one debt to pay, start with the ones that charge the highest interest, or you may suffer in the provision of the service in case of default. Free yourself as fast as you can from credit card and overdraft, which are always the great debt villains.
Direct all your extra winnings, such as vacation and thirteenth, for the payment of the debts. If in some months you have more money, pay a higher amount than the installments, so you end up removing everything faster and paying less interest. Think about it, evaluate the possibility of selling some goods to pay all at once. It’s worth saving the money to buy a new car rather than keep sending everything for interest.
Negotiate your debt
Now that you know how much it should be time to gauge how much time you can afford it all. Look for your creditors and see the possibility of renegotiating the debt, to get possible installments to be paid with lower interest. If you can not get a favorable deal, maybe it’s time to talk to your bank for a credit transfer. In these cases, the bank takes out your debt and renegotiates the amount with you, often at lower interest rates than you would pay. Whatever your choice, never stop paying the installments of the renegotiated debt, or you may end up coming out of this worse than when you entered.
Do not take on new debt
While in this discharge process the only new debt you can assume is that of renegotiation. Except in cases of emergency, during this period, pay everything you buy in cash, so that you have full notion of how much you are spending.
During this time, keep in mind that the results may take a while, but if you have discipline they will surely eat. Patience is the key to the success of this mission!