When faced with your own personal debt crisis it is extremely difficult to see the light at the end of the tunnel as bills and other payment receipts litter the table around you as you try and get your head around your finances. However, following these quick tips can open doors to getting a hold on your credit report and working your way towards reducing your debt.
Be honest and assess your finances
The first step you should take to reducing your debt is to make a note off all your out-goings no matter how small, whether it is the chocolate bar to get you through a Friday afternoon, right up to your electricity bills. Although this may make you feel further overwhelmed and upset with your finances, it is a vital step to getting your finances in order. By setting out all of your finances from one month, you will be able to see what you can cut back on. For example if you signed up to the gym in January as part of your New Year’s Resolution but you haven’t found the time to go, you could cancel the membership and go jogging in the park instead. You will be surprised at the amount of money you can cut out from your monthly spend, which you can then put towards paying off your debt.
How to tackle your debt
Make a list of how much you owe, the interest rates charged and who you owe as this simple task will give you an idea of who the main culprits are and which are costing you the most per month. You can then concentrate on reducing the amount you owe on the biggest culprit. By paying the minimum amount on all your debts whilst paying slightly more on the one you owe the most to; this will reduce your monthly repayment. The more you pay the less your monthly repayments will be and by keeping your monthly payments the same, your debt will begin to reduce.
Trim you bills
Although the majority of your debt will be made up from the smaller, regular payments, you can reduce these significantly merely by looking into your usage of the services. Check how many minutes you use on your mobile phone as if you use less this can reduce your bills every month. You can also look to see if you already have roadside assistance covered by one of your credit cards in which case you can get rid of your separate roadside assistance cover. Think about other services you use, for example, you could stop your cable or satellite television subscription and stream videos online which can be significant and then once you are financially stable you can consider signing up to the service again.
It is important you take a positive, proactive and systematic approach and although your debt may reduce slightly every month, a little bit at a time is better than nothing at all. You should also make time to take a break and look after your own health and happiness as cutting your debt does not mean you have to starve yourself of all luxuries and basic commodities. Once you have reduced your debt, you can work towards a debt free lifestyle and the feeling that you can sleep easier at night.