When I look back on my spending habits in my early 20’s…I cringe. I was living above my means — going out to eat and putting the meal on a credit card (what?!) — and I didn’t know the first thing about making a budget.
Suffice it say I came out of that season of life with a nice lil chunk of consumer debt. …and then proceeded to ignore said debt for several more years, paying the minimum, treading financial water, and hoping for that magical day when my balance would say ZERO.
But, dear reader, my debts didn’t *magically* disappear. (Surprise, surprise-right?) Eventually, I got my butt into gear and started making moves. Getting debt-free was a lot of work, I won’t lie. But it was also one of the most rewarding feelings when everything was all said and done.
I’m here to tell you, managing debt doesn’t have to interrupt your life in a bad way. If you know that you are on top of paying the people that you owe money to, then you can recognize that there is light at the end of the tunnel…and keep going. But you HAVE TO GET STARTED!
[RELATED: I have a whole series on BALLIN’ ON A BUDGET if you’re looking to downsize your spending habits while getting out of debt!]
Most people forget that their credit rating can play a big part in their future, so when they dive head first into credit cards and don’t think clearly about them, that’s when the trouble begins. It can lead to bad credit which can really impact financial decisions down the line. However, with the help of unsecured credit cards for bad credit, you could find yourself getting out of debt while rebuilding your credit worthiness at the same time. So, how can you get out of a hole of debt and start climbing the wall to financial freedom? Below, you’ll find some of my favorite tips for managing debt:
Keep To Your Payments. Every month, you need to get your bills paid on time. It sounds like a given: without paying the electricity, you’re going to lose power. But late payments can make it extremely hard for you to pay off debt, considering you usually will have to pay a late fee with each payment you miss. Set up a system for reminders (with due dates and amounts) on your phone or Google calendar.
Always Pay Something. Regardless of how much you owe and to whom, you need to always pay at least the minimum amount on your debts. Paying something means you are willing to clear the debt and even the smallest of payment can help to shrink debt. Speaking to creditors is essential. If you can’t make the right repayment, call them up and make a plan.
Prioritize Your Debts. If you have more than one debt, rank them in order of importance. Paying off your loans and credit cards is important, but paying those with the highest interest first is usually the best option. From there, rank them in order of how much you have left.
Pay The Current First. There are two types of debts: those you are currently managing (and are in good standing with), and those from the past . It’s always better to keep paying the debts that keep you in good standing, so that you can build up a trust rating with your creditors. Old creditors will continue collections attempts on accounts, but try to concentrate on making payments where you can and with the most urgent debts first.
Emergency Savings Count. When you’re on a budget, it’s hard to imagine having savings. However, an emergency savings account is going to make a huge difference to the little expenses that come up without warning. Work toward a very small fund to fall back on when you need it the most and go from there. Even having a small envelope of cash tucked in your drawer to help with stretching to the next pay day when you have more month than money can make a difference to you when you’re paying off debt.
Budget, Budget, Budget. Above everything else, you need to learn to budget. Make a list of all your regular expenses each month and how much you earn. Then look at how much you can spend on debt based on what’s left. Paying debts while keeping up with bills doesn’t necessarily mean you have to go without, you just have to be much more strategic.
Look For Help. The internet is a goldmine when it comes to handy resources to help you get out of debt, cut your spending, and learn to budget. Take an afternoon and just surf around the internet gathering information. Find helpful blogs and YouTube channels that you can follow for inspiration and information while you’re on this journey. Additionally, there may be some free community resources in your area but you’ll never know unless you look! Local nonprofits, libraries, and universities are a great place to start.
But I want to hear from you! How do you feel about debt management? What’s your go-to financial tip?