How to cut your debt in half
Poor money management skills and overspending can lead to serious debt problems. It's quite easy to get into debt, getting out of debt is much more difficult, however.
With determination and hard work, you can reduce your debt without resorting to costly debt advisors. Here are a few tips to help you cut your debt in half.
Evaluate your debts
Gather up all your debt statements and financial documents and determine where you stand. It may be difficult to face the truth, but it’s essential that you know exactly how much you owe. Include here all your personal loans, credit cards, car loans, and other debts.
Assess your spending
It’s time to evaluate your spending habits. Write down your monthly fixed and variable expenses, including mortgage/rent, utilities, gas, food, entertainment, insurance, etc. Calculate how much you have left to pay off debt. If you are not even close to the amount you need to pay off your debt, then it’s time to make some serious adjustments to your budget and look for ways to reduce expenses.
Establish a budget
After taking a closer look at your debts and monthly expenses, it’s time to sit down and establish a budget that allows you to pay off your debt quickly. Make it a priority to pay down your debt as soon as possible. To stay organized, focus on paying the highest balances first.
Evaluate debt consolidation options
You can consider a home equity loan, if you’re a homeowner, for example. Or you can consider transfering money from your retirement account to consolidate debt.
Adopt a saving mindset
If saving hasn’t been a priority for you, it’s time to change your mindset. In order to clear your debts, you need to make some adjustments – you can live on much less than you think. Focus on saving, not on spending, and your debt situation will gradually improve.
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