Many people around the country live outside of their means. Whether it is trying to keep up with the Jones or having an unexpected emergency happen, it’s very easy to go outside of your budget and plunge into debt.
In fact, according to Credit.com, 80 percent of Americans are in debt. This includes types of debt such as credit card and mortgage. If you are one of the millions of American who are plagued by debt, here are five simple ways to get out of it.
Formulate a Budget
Create a weekly or monthly budget and stick with it. You can easily make a template for a budget in a Microsoft Excel document. Be honest with yourself and include all of your bills that must get paid monthly, including your rent or mortgage, utility expenses, car payment, credit card bill, and other necessities, including your weekly food shopping list. Plan on paying all of your bills in full and on time.
Living within your means can be difficult at first, but is a necessary habit to abide by if you wish to get out of debt.
Create a Savings Account
Open up a separate checking or savings account and set aside some money every month that is designated for savings. Do not touch that money unless you absolutely need to. You never know when a rainy day is going to come.
Different Sources of Income
If you find that you’re not making enough money to cover all bills, it may be helpful to find a supplement source of income. Pick up a part time job for a period of time to help you pay off some of your debt. You can also invest in real estate, stocks, or other items to pick up some extra cash.
Lower Your Rates
Do you know your exact credit card rates? You may be paying high interest rates on existing debts that can really mount up, making it almost impossible to pay off.
Based on your credit, you may be able to qualify for better interest rates on your existing credit cards. Or you may be able to consolidate all of your credit onto one card for easier payment options.
Get the Numbers
Once you have consolidated your debt and know the exact number you need to pay off, it’s time to formulate a real goal to work towards. Total the three-year pay-off amount of your debt and add monthly payment of everything else you owe. Write the results down and that is your total monthly payment.
Getting out of debt and bankruptcy is totally doable. You just need to make a plan of action and stick with it.