It doesn’t take much to get in over your head in debt. Between student loans, broken cars and unexpected medical bills, debt adds up quickly. Sometimes you might have to use a credit card or take out a loan to cover these expenses. Just because you have accrued a lot of debt doesn’t mean you are stuck with it forever. If you dream of living debt-free, here are five steps to help you accomplish this goal.
- Consolidate Your Debt
When you have many different loans and credit accounts, it can be challenging to manage them correctly. You must remember to pay each bill on time to prevent late fees, keep track of your spending limits to avoid over-limit penalties, and know when your promotional program expires to avoid unwanted interest. Combining your debt into a single loan or credit account is a much easier way to manage your money. Different programs, such as MaxLend loans and other consolidation options, pay off your debts and leave you with a single monthly payment. This single account is easier to manage, so you are less likely to waste money on late fees and high interest.
- Analyse Your Spending
With all your debt in one place, it may be easier to review your other monthly expenses. This is an excellent time to make changes to existing accounts to decrease your spending. Some examples are:
- Getting a better rate from a different car insurance company.
- Opt for a less expensive streaming service, even if it means watching commercials.
- Review your cell phone contract for less expensive plans.
- Shop grocery sales and use coupons.
- Create a Budget
Once you have cut your spending, one of the best ways to stay on track is with a budget. Create a spending plan by reviewing how much money you make each month, analyzing your monthly bills and determining how much money you have left. Knowing how much spending money you have each month is necessary for keeping you from accumulating more debt. A budget also allows you to plan for significant expenses like a vacation, new purchases and even find a way to pay down debt and put money into a savings account.
- Pay More Than the Minimum
With the money you have after you pay your essentials, it’s a bright idea to set aside a portion to pay extra on the debts you already have. Since you get charged interest by your credit card accounts each month, your priority is to pay this off. The sooner you pay off your debts, the less money you pay in interest to the bank.
- Put Money Into a Savings Account
Once you pay off the account, take the money you were spending each month and put it into a saving account. This is an excellent way to earn more from your money because the bank pays you interest instead of the other way around.
You don’t have to be stuck paying down your debt for years to come. Follow these five steps to live a debt-free life.