Getting out of debt is only a matter of a few steps, but that doesn’t make it easy. While those who are debt free may claim that it’s easy, you got into debt for a reason. Whether it is a justified reason or not, there is a cause for you being in debt. You may have had to take out student loans to get through college, or you may have collected consumer debt as a result of a few bad decisions.
Regardless of the reason, in order to get yourself out of debt, you need to not only make smart choices, but understand how and why you got yourself into this reason in the first place. Below are a few steps that you can follow when trying to get out of debt.
Step 1 – Evaluate Why You are In Debt (Be Honest)
The first and most important step is to be honest with yourself. Many people try to get out of debt by simply earning more money or finding a cheaper interest rate. The problem is that debt often comes from not being able to control your spending. If this applies to you, admit it and move on. Acknowledge that you made some crappy choices and that you want to do better. Similar to getting over any other addiction, you have to admit your struggle in order to get over it.
Step 2 – Control Your Spending
The next thing you need to do, before you even think about paying down your debt is to limit the damage. In other words, don’t keep digging a deeper hole. You need to limit your spending. Interest rates will make your debt bad enough – don’t compound the badness.
Step 3 – Come Up with a Plan
The next thing you need to do is to come up with a strategy and concrete plan to get out of debt. This means looking at calculators or you may even want to use a car loan repayment calculator if you have a car loan. Each plan is going to be unique to each person. You have to figure out what works for you and write down the steps that you are going to take.
Step 4 – Stick to Your Plan
The second to last step is to carry out the plan. If you plan consists of earning $50 more dollars from babysitting, and not eating out, then do that. It’s easy enough to create a plan, but it’s even harder to carry it out. It’s going to take a test of will and hard work to get through it, but if you focus on the benefit, you can do it.
Step 5 – Celebrate
The last and equally important step is to celebrate once you are out of debt. It’s doesn’t have to be anything that special, but you should do something. This is a way to positively reinforce the good behavior. Without this, you could easily slip back into debt.
Getting out of debt may seem easy on paper, but it’s much harder in real life. Find people who can hold your accountable and support you through this process. And lastly, don’t give up! You can do it!