If you have landed in the dreaded pit then remember that you can dig your way out of it gradually, just like it took time for you to get surrounded by debt. You just need to show some patience and perseverance and think about following these tips here.
• Don’t be in denial and admit you have a debt in hands and set aside sometime each day to deal with your piggy bank.
• For the first 30 days keep your credit cards aside and don’t buy unnecessary stuff. The essential items like bills, groceries, gas, fees need to be paid on priority basis. The semi-luxury items, gadgets, and mobile devices can be halted in this period as they increase expenditure cause of recharging, balance fill or monthly purchase.
• Start making small cut backs, like buying non branded items at grocery, packing lunch for work, wearing sweaters instead of using heaters etc.
• The money you save from following above steps can be set up in an emergency fund with a target of at least $1,000 which you can keep adding to.
• Make a list; first put all your loans like bills, electronic rentals, auto loans etc. The amount in debt for these items goes in second column. The third column will have your smallest monthly debt payment and fourth will have percentage interest. You will now have a bird’s eye view of your monthly debt payment.
• It’s time to make a spending plan; first record all your monthly bills (house rental fee, utilities, insurance etc), and then the variable expenses of groceries, gas, meals etc. The monthly credit card payments and the deposit in emergency fund need to be included as well.
• Bring out on paper all your sources of income per month and assign the money first to the emergency fund then debt payments and then bills. Put variable expenses’ cash in separate envelopes to avoid over spending.
• The bill payment needs to be monitored either by paying them as soon as they come. This can be done by paying online or setting up a reminder in your calendar or mobile to caution you about the due date.
• As soon as you get $100 in your emergency fund, start making small payments. Discretionary spending needs to be watched till all small debts are paid off. Wait for a couple of months till you get a large sum in your emergency deposit to pay off the debt collection agencies.
• You might need to dwell on large budget cut backs if you feel haunted by a big debt ahead. Think of ideas like selling your new auto to buy a small or used one and even go for a smaller apartment to fight your debt with lower rent.
• You can do overtime or ask your housewife to opt for selling homemade items like dresses, business lunches, paintings, decorations etc; freelancing is an apt job for females with a talent opening doors for a new source of income.
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