If you have ignored your mounting debts and allowed them to snowball for several years or just don’t know where to begin when it comes to improving your financial outlook, there is no time like the present to familiarise yourself with a number of steps to dealing with debt. It can sound time-consuming, daunting, and perhaps even frightening, but by taking the first step, you can be confident in your ability to achieve maximum money management and, perhaps most importantly, eventually become debt-free. If you are currently struggling with rising debts, continue reading to find out what your next steps should be.
1 – Find out what you owe
It may sound easier said than done but the first step to dealing with debt must be finding out what you owe. It can be extremely difficult to do if you are accustomed to ignoring any letters that fly through your door but by taking a deep breath and approaching the situation head-on, you can prevent it from worsening and even causing long-lasting damage to your finances. In order to do so, accumulate any bills, statements, and final warnings that you can find and start adding until you come to a rough ballpark figure. If it exceeds your net income, however, you may have to make a number of changes to your existing spending habits until you have paid off what you owe and are, ultimately, debt-free.
2 – Assess your options
If you have found out what you owe, you must assess your options to allow you to establish a suitable action plan going forward. In order to do so, determine which debts must be paid as soon as possible and which debts can be tackled at a later date. If you are struggling to know where to begin, however, any high-interest debts or debts that are only likely to snowball if ignored for a prolonged period of time must be prioritised as this can prevent you from being forced to splash out on unnecessary interest payments in addition to the debts you originally owe. If you have suffered from credit card debt for decades, on the other hand, a debt payoff calculator can allow you to save money by only paying what you owe. In addition, a debt payoff credit card can also be established in a matter of minutes so you can eliminate your debt twice as fast.
3 – Review your credit rating
In order to deal with debt, you must also review your current credit rating and keep an eye out for inaccuracies, errors, or patterns. It costs nothing to do so and can allow you to identify the accounts that may be negatively impacting your finances so you can take action and adjust your spending habits going forward. It does, after all, only take a handful of late payments for your credit rating to plummet and you may not even be aware it is happening behind the scenes. If your credit rating reveals a number of late payments in every account, however, you may be considered high-risk even if you ended up paying them at a later date. It may sound like a pointless step but as banks are known for being particularly fussy when it comes to credit ratings, it is worth taking the time to improve yours in any way you can.
4 – Seek expert advice
It is entirely possible to deal with debt on your own but if you are struggling to cope or need a helping hand when it comes to answering a couple of niggling questions or queries, it is better to be safe than sorry and seek expert advice. It can be done in a number of ways but is most commonly done by reaching out to a creditor, advisor, counsellor, helpline, or even a close friend or family member that you trust or has dealt with the same problem in the past. It can completely transform your approach to dealing with debt and reassure you that you are not alone and that you have someone to talk to when you are struggling to make a decision. In addition, it may also remove a significant weight from your shoulders to discuss any financial problems you are having and enable you to come to a suitable conclusion yourself.
If you have been struggling with mounting debt for a number of years or have only recently gotten yourself into a sticky financial situation, it may be time to take a deep breath and take action. It can be extremely scary and unnerving but by finding out what you owe, assessing your options, reviewing your credit rating, and seeking expert advice, you will be glad that you made a change when you did and can be confident in your money management skills going forward.