So, you have ended up with a lot of debt for being unable to curb your spendthrift nature or due to an expensive medical treatment. No matter what is the reason, you need to clear your debts rather than losing hope and feel disgusted. The first and foremost step to eliminate debts is to create a plan of dos and don’ts and act according to it. Once you get out of debt, you should promise to control your expenses and start saving. Otherwise, you will get into debt again and once more you will have to look for ways to eliminate debt which is a very overwhelming experience.
Below are the steps that you may follow to clear your debts swiftly.
Start by calculating how much debts you have incurred. This is very intimidating, but you have to do this in order to find out ways to eliminate the debts. So, list the creditors to which you are in debt and note down the owed amounts (including the interest rate of each). Also, remember to take into account the minimum payment on monthly basis for every account.
Now, when you are done with making the list, it is time to set goals i.e. to decide how much you can spend every month for debt elimination. This calculation will help you determine how much time will be required to eliminate debts completely. An approximate calculation of the time-span will prepare you mentally to go through the daunting experience of clearing debts.
There is a big controversy about whether it is beneficial to clear debts by paying high to low or low to high. While some opine that by opting for low to high, one cannot benefit from lowered interest rates, some are of opinion that when you start by paying high interest rates on your current debt amount, your debt increases as a result of which, it becomes very tricky to eliminate the amount. You should look into this matter carefully and choose the right option.
In the fourth step, you need to decide on which debt to be cleared at first. Is it the lowest balance or the highest interest rates? Whatever is your decision, you should proceed wisely and carefully without losing focus on the goals.
Keep watch on how you are moving aheadin the debt elimination process. Make sure to take a look at how your credit score is improving every month.
Once you have cleared all your debts, take a pledge to never do anything that will get you into debt. Open a savings account and make sure to save a considerable amount of your earnings every month.
If you follow these six steps, you can get yourself out of debt quickly.
Author Bio–Natalie Foster is popular blogger writing on different effective ways of making investments and saving. In this article, she talks about the steps on how to get out of debt.