A mountain of bills. A series of unread emails. A list of unanswered phone calls.
What debt looks like is different for everyone, but the feeling it inspires is the same. With every bill, notice, and voicemail message you ignore, you’re one step closer to your financial doomsday.
Serious debt won’t solve itself. In fact, if you pretend nothing’s wrong, that single step turns into a running leap into bankruptcy. The only way to walk yourself out of debt is to face your fears and do something about it.
It’s no easy feat, but with an organized plan of attack and the dedication to see it through, you can tackle just about anything in your ledger. Prepare yourself by checking in with these debt-busting tips, and you’ll take some of the sting out of your task.
1. Involve the Experts
If you were looking to treat a nasty infection, you would go see a doctor. If you were trying to repair your car’s broken shock absorber, you would visit a mechanic. It only makes sense to involve the appropriate professionals when you want to fix your debt-related issues.
Make an appointment with a professional financial advisor. They’re a reliable source of credible information on a variety of issues and financial products, and they can help you devise a budget that works within your capabilities.
Make the most out of your meetings by asking them as many questions as possible. Get them to walk you through the pros and cons of different financial strategies like consolidating debt, investing with robo-advisors, or taking out personal loans. They’re there to answer everything from frequently asked questions about saving money to lesser known inquiries about finances.
2. Achieve Balance
When you’re ready to kick debt to the curb for good, you’re ready to do just about anything to eliminate it from your life. Many of us think we have to live the life of an austere monk if we expect to make any real change to our spending habits, but this strategy is a dangerous one.
When you focus too much on your finances and deny yourself all pleasures but paying off debt, you can end up spending more than you normally would. Think of it like a diet. When you jump into a meal plan consisting of only vegetables, you’ll crave so many different foods you won’t know what to do with yourself. Eventually you’ll crack and pile up on the fatty and sugary snacks you avoided.
This balance is hard to achieve, but it’s an important one to strike. Research ways to occupy your time without spending money, so you have a break from saving. That way you won’t feel like you’ve been given a jail sentence as your pay off debts.
3. Order Your Debts
Your negative net worth is the collective sum of several smaller debts. When you’re ready to pay them off, don’t tackle the total amount — target individual bills, one at a time. When you structure your plan this way, you break what could be an insurmountable task into achievable steps so you’re less overwhelmed by your undertaking.
In determining which bill to focus on first, consider the APR of their debts. While you might want to pay off your largest loans first — like your student or auto loans — you should focus on smaller loans like the credit cards and payday loans taken out in your name.
These loans have higher interest rates that accrue faster than your national student loan, even if they are tiny in comparison. In the midst of restructuring how it distributes loans, the National Student Loans Services Centre typically offers repayment relief for those struggling with debt, so you can afford to put this loan on the back burner as you tackle personal loans.
Instincts may tell you to ignore your debts, but that’s how you got here in the first place, facing down mountains of bills and unchecked voicemail messages. It’s time you face your financial emergency head on. It will take a lot of work, but with the help of these tips, you can start taking a bite out debt.