As the year draws to a close, many begin to look at the financial situation and make resolutions to improve it. This is especially true when one focuses on the build up of debt related to holiday spending. So, what can you do? Here are 5 helpful hits for paying down debt:
1. Brutal Honesty
The first thing you have to do is have an idea of where you are at. This means that you need to be brutally honest about how much debt you have, and how much income you have to help pay it off. You also have to take a good look at your spending habits and be brutally honest about why you’re in this position to begin with. You have to be willing to change.
2. Create a Plan
Next, you have to take the information from your financial self-discovery and create a plan. This plan needs to include a strategy for changing your money behaviors, as well as for paying down your debt. If you don’t create a lifestyle change in the way you spend money, you will just rack up the debt again down the road. So make a plan that includes replacing negative money habits with good money habits, and then make a plan for paying down your debt.
3. Don’t Forget to Save
Make sure that, as part of your plan, you are still setting something aside for savings. It doesn’t have to be a lot, but it should be something. You need an emergency fun to fall back on, and you also need to develop a habit of saving. It’s worth noting that many people fall into the trap of putting every dime toward debt reduction, and then when an emergency comes up, they are right back to square one, since the credit card is used to alleviate the emergency. Don’t let that happen to you.
4. Negotiate Your Loan Terms
In some cases, you can negotiate your loan terms. Contact creditors to see whether they will reduce your interest rate. Many creditors do this just for the asking. If things are really dire, you can explain your situation and negotiate a repayment plan. If you are in earnest about repaying your debt, many creditors will work with you. But, if you need professional counseling or help, seek it. Just be careful to avoid scammers.
5. Look for Additional Income
You can speed the process considerably if you look for extra income. Take an extra job, or look for online opportunities. There are options wherever you look, and every little bit helps.
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