Information brought to you by our partner, GreenPath Financial Wellness
Our finances are intertwined with our everyday lives and affected, debt can easily become a problem. It's best to stay grounded and identify where the "leak" is coming from, why the "leak" is happening and what to do next to seal the "leak".
1. Get an idea of what you are currently spending.
To know where you’re going, you have to know where you’re coming from. Are you spending more than you make? Do you have excess money each month that you could be putting toward your debts?
2. Take a look at your spending habits.
Once you have a full financial picture of your monthly surplus (or deficit), figure out what your spending habits are and how you might change them to get out of debt. Maybe you’re spending too much on subscription services – or realize you’re spending more than you allotted for groceries each month.
3. Prioritize expenses and identify areas where you may be able to save.
Once you have an idea of where you are spending and why, see if there are areas where you can cut back.
Hold yourself accountable, and check back in on your spending habits.
4. Check the plan.
Plan your paychecks and check back to see how your actual spending compares with your plan. Use a highlighter to compare your paycheck with where your money needs to be distributed to and make any adjustments needed.
5. Automate everything.
Set up direct deposits and automated payments so that you don’t miss due dates and get hit with a late fee. Use alerts and overdraft protection to help you avoid mistakes.
6. Choose a debt payoff strategy that works for your situation.
Many people consider paying the minimum on all debts and focus extra payments on one debt at a time. When you pay one account off, they redirect the monthly payment to the next one in line, adding it to the minimum they were paying already. This way, each time you pay off one debt, your payment on the next one gets bigger. This could be a good approach for you to consider.
7. Look into a debt management plan.
Depending on your situation, there may be options for you to get out of debt more quickly. If you have high-interest credit cards or other unsecured debts, a debt management plan could be just what you need to get out of debt for good.
A debt management plan works with your creditors to bring your accounts current, lower interest rates, and eliminate fees. This means that more of your payment goes toward reducing your account balances. It can help you pay off debts faster and save money on interest. An added benefit is that once the debt management plan is established, diminishing collection calls and creditor balances help reduce worry and stress about your debt situation.