Debt can be a good thing or a bad thing.
This depends largely on how you use it to your advantage. But what happens when you begin to owe so much money that you have no idea how you’re going to pay them off?
This is when many people start to panic and wonder how they’ll be able to clear their debt.
If you are wondering how to get your debt under control, relax because this post will show you how.
Firstly, don’t panic
When you realize all your credit cards have been maxed out and you don’t have a way of paying them, you start to panic and that is not good.
You’ll have to relax and know that you can pay it off no matter how long it takes.
When you read this post to the end you’ll learn how to get your debt under control and you won’t have to get so worried again.
Many people have successfully gotten themselves out of much bigger debt than you are in right now and you too can get yourself out of debt.
Below are some steps on how to get your debt under control;
1. Calculate how much debt you owe
The very first step is to know how much total debt you owe.
This is very important as it will show you where you are financially and you can start thinking of ways to clear all your debt.
Once you have an idea of where you are financially and how much you owe, you can start working towards paying off your debts.
2. Make a plan to pay off your debts
The next step to take is to make a plan to pay off all your debts.
You can do this in order of priority and importance.
Which debt do you owe now and must be paid immediately?
Is it mortgage or some other thing?
Then which debt can you postpone till later that won’t have any serious consequences?
Pay off the important ones first then gradually pay off the remaining debt.
How long will it take you to pay off all your debt?
What will you have to do to be able to pay them off?
Are you going to get a second job to increase your income?
Will you have to get rid of all your credit cards till you pay off your current debt?
How many credit cards do you have? Do you need that many?
Maybe you’ll have to only buy generic products from now until you pay off your debts.
Or maybe you’ll have to stop eating out till you are debt free.
Do whatever you have to do to make sure you pay off your debt in the allotted time you specified to pay off your debts.
Make a plan to pay off your debts and stick to it and in no time you would have paid off all your debts.
3. Start paying cash for things
Having a ton of credit cards can make you keep spending because when we don’t spend cash it really doesn’t feel like we’re spending money… until the bill comes.
Instead of paying for everything using your credit cards, start using cash only and forego your credit cards.
This is till you have paid off your debt.
You are only allowed to use your credit cards when it’s a real emergency.
Our mind can sometimes convince us that something is an emergency even though it’s not.
Know when something is really an emergency and when it’s just your cravings.
One way you can make sure you start paying for things using cash is that you get rid of your credit cards.
Maybe not all but reduce them. You don’t need eight different credit cards in your wallet.
Two or three will do. If you want to know how many credit cards you really need, click here.
4. Live below your means
If you really want to pay off all your debts and actually never owe again, one major thing you’ll have to do is live below your means.
This is one thing that throws people into debt deeper than they think. Do you really need a new iPhone when the current iPhone you’re using – because lets face it, you’re too big to use an android, right? – works fine.
You don’t have to have that brand new thing because someone else has it.
You don’t know what they had to do to get that thing.
Focus on your lane and live below your means. It’s the surest way to get yourself out of debt and stay out of debt forever.
5. Start saving money
Lets face it, if you’re in debt you really don’t have any savings. If you do, let us know how you managed to do that in the comment section.
But to get out of debt now, you’ll have to start saving your money. This is equivalent to living below your means.
Whenever you get your paycheck, transfer 10% or 20% to a separate savings account that is specially made for saving and out of that savings you can start paying off your debt.
But if you earn minimum wage and wonder how you can start saving money with the minimum wage pay, click here.
6. Be determined to pay off all your debt
If you love your financial independence and what to live life without worrying about debt, then that should be enough motivation to help you get rid of all your debt.
But if you see debt as something that can wait and you’re not in a hurry or motivated to start paying off your debt, let me tell you what to look forward to;
- Being embarrassed in public about your credit card being declined
- Your credit score will drop
- Not being able to afford basic amenities like your cable bill and water bill, etc.
- Being truly broke
I don’t know about you but I hate being broke.
If the thought of you going into your wallet and having an empty wallet stare back at you scares the sh*t out of you, then you should start looking for ways to clear your debt and look for side businesses to do, like right now.
7. If all else fails, Bankruptcy
This is the option of last resort. If you realize you’ve fallen really deep into debt and there’s no possible way out of that debt, file for bankruptcy.
I know it’s a bit humiliating but not as humiliating as getting your car repossessed in front of your kids or colleagues.
File for bankruptcy and start over.
It won’t be the end of the world.
You definitely should know people who have filed for bankruptcy more than once and are still alive today and thriving.
Many millionaires and billionaires out there have filed for bankruptcy at least once in their life and they are wealthy right now. Everything will be fine.
Finally, a recap of how to get your debt under control
How to get your debt under control summary;
- Calculate how much debt you have
- Make a plan to pay them all off
- Start paying cash for stuff
- Live below your means
- Start saving money
- Be determined to pay off all your debts
- File for bankruptcy
Are you in debt?
Are you prepared to do what it takes to get yourself out of debt?
Which of the methods above are you willing to try and which ones will you combine together to fast-track your debt repayment?
Let us know in the comment section below.
Manage Your Money Better
Below are some personal finance books I recommend to help you save more money. They have helped me a lot and I'm sure they'll help you in your journey to financial freedom.
- The Compound Effect by Darren Hardy
- Total Money Makeover by Dave Ramsey
- I Will Teach You to Be Rich by Ramit Sethi
- Master Your Money (Super Bundle)
- Need an extra $2,500? Get loans up to $5000
- Are you in debt? Get free debt consultation and find a solution to your debt
- Unshakable: Your financial freedom blueprint
- The New Money Masters
- Tools to make money in tough economic times
I have read about 5 out of the 7 books and I can boldly say they have helped me handle my finances better. I believe in them because they have helped me in my financial journey and I think they’ll help you too.