If you are knee deep in debt, you may find that you are stressed and even a good night’s rest is hard to do. The stress of this burden makes you anxious to do something to get rid of it, but it may be hard to know where to begin. Before you find yourself completely helpless, take a look at your options and get on the path out of this credit nightmare.
Basically, you have two options… You can get out of debt on your own, or with the aid of a professional. Either way, the important thing is to start now on working toward getting out of debt. Here are some tips for those who want to find their way out of debt on their own.
First write down all the debts that you owe. You will need to list all the information about each debt such as information about the creditor, amounts, and your account number. Then include the agreement that you signed when taking the loan. All of your financial statement should be easily accessible and in a safe and secured spot.
Once you have your list, take some time to organize all your paperwork. At the top of your list will be any debts that have collateral, such as a mortgage or other large loans. Those for which you are legally bound should be high on your list of priorities too. Debts that can go lower on your list would be the more minor credit card type debts. Still, those ones need to be taken care of as well, as you can be sued for lack of payment.
When your list is in place you are ready to get going on your budget. This is a very basic and essential part of getting out of debt and should not be too hard to do. However, you never take your budget lightly, because used properly it’s a very effective tool to get you out of debt.
First, write down all your income and expenditures. Once you have your budget ready, you can take a look at your prioritized list of debts. You can determine what to pay off first and look at what amount you can make for each payment to get rid of that debt as soon as possible. When you have it all figured out, you may find that you have a little left over to save. This is a very smart idea as it will help you on the path to reform from your extravagant spending habits and keep you from finding yourself in another financial mess.
While you are getting this all figured out, some of your creditors may become impatient and there’s a chance that they may tell you that they are considering taking legal action. In this case, you need to contact them and ensure them that you are doing everything you can. Let them know about your new plans and that you will be making regular payments from here on out. If you are friendly and positive, they will likely trust your honesty and they will allow you to get on with the business of paying off your loan.
Taking these steps you will find yourself in the happy position of being debt free in a fairly short time, as opposed to just letting your unpaid bills pile up while you stress over them. A proactive approach is certainly the way to go when your knee deep in debt.