Quite a few people these days feel like they are simply drowning in debt. They're looking at their credit card statements each month and wondering what they're gong to do to appease their creditors and gain a little bit of financial security and independence again. The great news is that almost anyone can lessen their debt loads and take one more step towards solid financial ground again. Not everyone can be a millionaire, but nearly everyone can boost their cash cushion. Here are three steps to "help you swim when you're drowning in a pool of debt."
Since this swimming analogy may work as a gimmick for the article, let me first apologize to those who think it's goofy, because it kind of is. And two, please don't take this as specific advice for people. Everyone is different, and everyone should do their research and own investigating for the best path to take when paying off their debts. Ready? Great, let's move along.
Swimming Lesson #1: Learn To Tread Water
The first step you've got to take is treading water, which in this case means not taking on any more debt. It is easier said than done, but getting rid of the credit cards for a while and focusing on sound financial maneuvers is better than adding to the balance each month.
It is odd how many people figure that their monthly payment is, say... $100 each month. And so they go and pay $200 figuring double payments are good, right? Usually they are if they fit your general financial plan, but it's not very productive if you're adding $100 of charges to the card each month. Instead of being out of debt twice as fast as you could be paying the minimums, you're just setting yourself back.
Don't add to debt as you're actively trying to pay it off. Stop spending on your credit cards or other lines of credit that allow you to draw against them. Keep credit to help you buy a car at a more affordable rate, or a house, or a rainy day.
Swimming Lesson #2: Technology Is Your Friend, Start to Doggie Paddle
If you've read any articles of mine, you'll know that I'm a big proponent of making use of the different technological tools available. Whether it be online banking to keep track of any potentially suspicious charges, or smart phone apps to track spending and take care of deposits, I'm all about it. You need to be careful, of course, and be sure that you don't leave passwords exposed, windows open and account numbers listed on the screen.
As long as you are careful, then you can make use of obtaining your credit report online through a reputable source, accessing your banking information, and making sure that your payments are put onto a regular schedule that you can monitor in just a couple of moments out of each day. If you fall behind on your checkbook's register, you can often get access to your recent expenses online so you don't overspend. The list goes on and on. Being able to track your finances so quickly and easily can be maddening for some people who obsess over such things, but once these folks get a little bit more balance to their approach, this easy access can be a wonderful thing.
As with all things, moderation when you're using the technology based solutions is necessary, and ensuring that the steps you take are secure is necessary.
Swimming Lesson #3: You Have Got to Have a Plan, Swim Laps
In the first point, I mentioned briefly whether double payments fit into your general financial plan. If you don't have a financial plan, why don't you? Is it a cost prohibitive type of thing? Do you not want to go to a professional to get your finances sorted out and have to show them what you make, what you spend, and what you owe?
A point that I've made several times from my own experiences is that unless I actually plan out a strategy of spending, saving and repaying, I'm bound for so so success and just as much stress as ever.
However, if I do the hard work of tracking every expense, identifying the essentials like food, bills etc, then I can easily identify how much extra I can put towards saving and repaying debts. Without getting this in order, it's a a train wreck waiting to happen.
Get Out Of The Pool
What are your plans to get your head above water and get your finances in order? Do you have your own plan that makes these three steps pointless and utter nonsense? If you do, please share your secrets for the others who are struggling with getting out of debt.
I want to thank you for reading this article and introduce myself. I'm Derek, and I do most of the research and writing at thedebtonator.org, where we gather and make commentary on what we hope are the most useful and interesting links to articles and other blogs about dealing with debt and personal finance issues in one location.