How to Get Rid of Your Debts

So you are in debt. Join the club. In this economy, its not that surprising. Maybe you’ve had unexpected emergencies. Or lost your job. Or maybe you’ve made some bad decisions you’d rather not think about. Its okay. You are not the first person to be in debt, and you surely won’t be the last. But with a little work, you can clear your debt.

It can be daunting, looking at piles of overdue bills, or receiving harassing phone calls from creditors. The first thing you want to do is figure out how much money you owe. Tally up everything, no matter how small. Whether its overdue credit cards, electric bills, car payments, student loans or simply money friends lent you. Write it all down on a piece of paper, so you know how much you owe. Make two columns. Column should be a debt or bill you have to pay every month. This includes things like a groceries, insurance,electric bill, rent, etc. Column B is debt that is removed forever once you pay it. It might take a while, but things like medical bills, student loans, credit cards, late fees should all go in this column.

Next write down how much money you make in a given month. This amount should be more than the total in column A. Pay off your living expenses first every month. Paying rent or your mortgage is more important than almost anything else. With your leftover money start paying off the expenses in column B. It doesn’t matter if its a measly $10 late charge from Blockbuster. Your goal is to slowly get rid of debts and eventually concentrate on the larger ones. Marking something off on your list gives you a sense of progress. Once you have the items on column B eradicated you can start putting that money into savings every month.

Depending on your income, you might feel like you just don’t have enough money to pay your bills every month. But depending on who you owe money to, they might be willing to settle for less than what you owe. The only way you know is if you contact them. Just state your case, that you owe money, and are willing to work with them. A lot of businesses are also willing to work out alternate payment plans. Not everyone can afford that same amount every month, and that’s okay.

If you do not have money left over at the end of the month to pay debt, then you are simply not making enough money or you are spending too much. Those are the two options. Maybe you need to find a part time job. Or you can ask your boss for a raise. Take a hard look at your budget. Can you trim anything out? Entertainment is one area many people are loathe to give up, but it can also be a huge money sink. Rent movies instead of going to the theater, and learn to cook instead of going out.

Know when bills are due. This will keep you organized, and will also save you annoying late fees. Mark it on post-it notes or on the calendar if you have to. If you are caught off guard by bills, it is your own fault. Hopefully with these tips you can clear your debt and be on your way to achieve financial freedom.

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Posted in Debt Relief