Change your mindset
“Making the decision to get out of debt is the first step, but also the hardest,” said Cory Chapman, personal finance coach and CEO of EFC Wealth Management. “Actually, changing your mind and accepting that you have to change your life is the hardest part. The process of getting out of debt is going to take discipline, but it starts with the mindset that you want to be debt-free. “
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Get a clear picture of the actual amount of your debt
To get rid of debt, you first need to know how much you actually have, said Michael Gerstman, ChFC, CLU, CEO of Dallas-based retirement planning firm Gerstman Financial Group.
“List all of your debts, current balances, and the interest rate on each debt,” he said.
Consider consolidating your debt
Debt consolidation can be a good option for those who have various high-interest debts and want to make one monthly payment that helps pay off all of your debts at once. If you go this route, taking out a personal loan could help you achieve your financial goals in a more manageable and affordable way.
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Track your monthly expenses
Now that you know how much you owe, get a clear idea of where your money is going, whether it’s for your morning coffee, tech, shopping, dining out, or planning your dream wedding.
“Most people don’t even know what they buy each month,” Chapman said. “Sundries and small purchases add up. Use an app or program to help you track your spending habits.”
Eliminate any subscription services you don’t really use
When you see how much you’re spending each month and exactly what you’re spending, it’s easier to see how you can cut costs. Start by eliminating any automatic payments you make for subscription services you don’t use or can easily do without.
“There’s no easy way out of debt except to change your personal spending habits,” said Robert Reilly, senior wealth adviser at PRW Wealth Management. “If you can’t afford to pay for this item or service this month, you can’t afford it – period. Review all subscription agreements you’re charged for, from Planet Fitness to Netflix to Apple Music to Spotify.. Do you really use this thing? Can you live without? Everything can be reconsidered.
To eat less
Another important way to reduce your expenses is to reduce how often you buy takeout or restaurant food.
“Make it a goal to cut [spending on eating out] twice a month by bringing lunch to work and having dinner at home during the week,” said Trey Peterson, senior financial coach for Ramsey Solutions at Haven Financial Group. “It will probably save you $250 or more per month. It’s an increase that can help eliminate the smaller balance on your credit card.”
Reduce your cable and/or phone bill
Renegotiating your cable or phone plan, downgrading your plan, or switching carriers can save you hundreds of dollars.
“A lot of my clients have found it saves them $150 to $200 a month, and they never miss the 500 channels they never watched,” Peterson said. “In fact, I often hear that it has pushed them to be more active while helping them reduce their debt.”
Stop paying for things with a credit card
When you’re already struggling with credit card debt, you need to do everything you can to keep it under control. Whether you need to schedule your payments so you don’t miss a credit card bill due date, or if you only need to use your card for necessities, there are ways to better manage your credit card. Make sure you always know how much you’re using them and when you need to pay them back, so your debt stays under control.
Develop a budget
Once you have a clear idea of how much you’re spending — and you’ve taken steps to reduce that amount — you can see how much money you have left each month to spend on paying off your debts.
If you don’t have enough income to pay off your debts in a reasonable time, find new sources of income
If you don’t have enough money left between your income and expenses to be aggressive in paying off your debts, consider increasing your income by working overtime, starting a new part-time job, or starting a side business or side business.
“Think about the extra time you have and make good use of it,” says Ericka Young, certified financial coach and founder of Tailor-Made Budgets. “There are lots of ways to use your gifts and talents to earn a little extra income. Just an extra $500 a month could make the difference in paying off your debt in months rather than years.”
Sell household items you don’t need
To get even more funds to pay off your debts, consider selling household items you no longer use, such as clothes or electronics. There are probably many sources of income hidden around your home.
Check your progress weekly
Creating a debt repayment strategy is important, but it won’t be effective if you don’t really stick to it. Be sure to check your payments and see if you have accumulated any new debts that will need to be settled.
Find an accountability partner
It can be helpful to have someone to check in with that keeps you on track with your debt repayment goals.
“Just like with a diet or workout routine, having an accountable partner makes all the difference in your chances of success,” Peterson said.
Your responsible partner can be a friend, family member or financial professional.
Once you’ve paid off your debt, start prioritizing savings
Paying off your debts is a major step in getting your financial life back on track, but it’s not the only one. Set yourself up for long-term success by building your savings and retirement funds.
“Once you’ve streamlined your life, start thinking about saving and paying yourself first every pay period,” Reilly said. “Start putting money aside in your employer-sponsored retirement plan, or start your own if your employer doesn’t have one.”
You should also aim to save at least $1,000 in an emergency fund, several experts said. This will prevent you from falling into debt again in the event of a family, medical or household emergency, or loss of employment.
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This article originally appeared on GOBankingRates.com: Feeling Overwhelmed With Debt? Here are 14 ways to improve your financial future
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