It doesn’t matter whether it’s a mortgage or a couple of thousand in consumer debt, if it’s causing you to lose sleep, now is the time to start conquering it. A fresh start, a fresh approach. Onwards and upwards to a debt-free existence.
Here are some tips to get you on the way.
Know What You Owe
Want a good credit report? What better way than to pay off your debts more quickly than minimum, eliminate high interest credit cards and pay your bills on-time or early?
Sit down and start working out dates. This is the first step. When are your bills due? Write it down in your diary and put a coloured Post-It next to it so you don’t forget.
When are your repayments due, and what’s the minimum you can pay? Write down how much you owe in total, and keep a progress report.
Pay your bills on the same day every month. That way, you’ll never be incurring late fees or being threatened with any utility being turned off. Pay your bills with cash, not credit.
The last thing you need to be doing is paying off debt on one hand, and increasing it on the other. Then organise to pay off your debt on the same day of every month (or with a credit card, paying off a little every week). The routine makes it easier, and makes it unlikely you’ll forget and get yourself a nasty late fee.
Know What You Can Change
How can you start to pay back your debt faster? Is there an expense you can eliminate, or some extra income you can channel towards repayments? Start thinking about how you can get rid of chunks of your debt. Maybe start with eliminating credit card debt, or paying off your higher interest cards. Choose one debt you are going to aggressively attack. Once you’ve gotten control of that debt, move onto the next one.
The Bare Minimum
Paying the minimum on your credit card isn’t going to cut it. If you want to get on top of your debt, you need to be repaying over the minimum repayments. It doesn’t have to be an astronomical amount, just enough to get a handle on your debt within a sensible timeframe.
Once you start getting somewhere, you’ll start feeling in control and finding it easier to control your debt.
You need a budget if you are going to get on top of the beast. Work out expenses, and some savings. There will always be a couple of variables, so ensure that you’ve left some space for them. Then budget everything else into your debt repayments.
Rewrite your budget once a month to make sure it’s completely realistic and has taken account of all the changes in your income or expenditure. This is your decade. Make it a debt-free one, or at least, a decade that’ll make the decades after that much more pleasant.