Getting Back on Track Money Wise

When you realize that you are overwhelmed with debt, it may be tempting to just give up and no longer focus on your monthly income or bills. This cycle of making payments without a plan can actually cause more financial stress and hardship. When you find that you have more debt than you can handle the only way out is to realize the situation you are in and work to getting back on track money wise.
The first step is to realize that you are in fact facing debt. If you are showing the warning signs of missing payments, re-using a credit card immediately following making a payment, and paying one card with another one – these are all signs that you have a debt problem that needs to be addressed.
Here are the steps you should take to get back on track:

  • Determine exactly what your financial situation is. This includes making a complete list of your income and your expenses. Begin by listing all of your monthly obligations including credit and debt payments as well as everyday living expenses such as groceries, fuel, memberships, and entertainment costs.
  • Using your list create a realistic, manageable budget. Your budget can be written monthly or can be broken down into smaller periods of time such as weeks or paychecks. Your budget is a road map or plan on how to use your monthly income to make sure and meet your monthly financial obligations.
  • Determine which plan to use to get out of debt. There are many options for working to reduce and eliminate debt, credit and debt solutions are one. You can work with a professional debt management company, with your local bank, with a financial advisor, or even on your own to determine a plan for getting back on track. Once you are living within your budget you can research the options. These options include:
  • A debt consolidation loan. A debt consolidation loan allows you to get one new loan and pay off all of the others. These loans are usually available with a lower interest rate than those found on credit cards, and might even reduce your monthly payments as well.
  • The snowball method. Using this method you focus on paying off one credit card or installment debt and then snowball or roll what you were paying on that one debt to the next one and so on and so on.
  • Working with individual creditors may be a necessity if you don’t have the credit to obtain a new consolidation loan or any extra funds to begin the snowball method. If you are already drowning in debt a debt counselor can help you work with individual creditors to create the best repayment plan.

Whether you begin on your own or with the advice of an advisor the key is to gain a complete understanding of your debt and create a plan to get back on track.

Leave a Reply

You must be logged in to post a comment.