All big tasks start with simple steps. Debt is no different. While it seems like a huge, almost insurmountable, hurdle to overcome, there are some simple steps that you can take to get yourself back on track. Once you start taking simple baby steps towards getting back into black, you’ll feel in control of your finances and your life once more.
Here are some of the steps to take. And no, saying sorry and having a motto are not some of them. Thanks to the Financial Highway for inspiration.
The first, most important, step. If you don’t know where your money is going, there will be no way you can possibly divert it towards saving money and paying down debt.
Know you’re debt
It’s a hard one to look in the face, but until you know thine debt, then you’ll find it pretty hard to tackle. Brace yourself and know how much you owe. That way you can work out a plan to get rid of it.
This is the greatest weapon in your arsenal. Budgeting will be the way to pay off debt, without making your life a constant misery. You can pay off your debt gradually.
Spend less than you earn
A relatively logical and obvious truth, but nothing is harder to learn. The difference between what you spend and what you earn can be invested in paying off your debt. If you’re still living above your income, you’ll only incur more debt.
Having multiple credit cards is a path to debt spiral. Keep yourself to one, so you know how much debt you have and how much you have put on every month. Alternatively, try and avoid them at all costs – got the Visa Debt Card option instead.
Choose your first enemy
Tackle one debt at the time. Go for the high interest accounts, and pay one of them off first. This isn’t just important to save yourself money, it’s also important to see how you are starting to achieve your goals. The positivity you take from that achievement will leave you ready to fight the next enemy.
Try and consolidate
If you can move all your debt into a low interest loan, that might be a good way to reign in your debt in and tackle it gradually. You’ll also be saving money on the interest from the accounts.
Learn to sacrifice
They don’t necessarily have to be pricey things. Cigarettes are a big thing- you’ll save a lot of money if you can kick the habit. Take public transport, not cabs. Walk the extra couple of metres to an ATM that won’t charge you for the transaction. It’s not about living a life of an ascetic, it’s just about making the sacrifices you can bear to save yourself some money.
Know your reasons
Know why you want to get rid of your debt. Write it down in a list, and remind yourself of it whenever you feel your resolve is flagging. Motivation and positive energy is a big part of paying down debt.
Make long-term and short-term goals
Short-term goals are great as they’ll keep you motivated as you start to achieve them. They also help you in achieving your long-term goals, in measured steps. Measure your progress against your goals, and see how far you’ve come.