Debt. What a word! Reading it alone can elicit a strong emotional reaction, let alone confronting it head on. Today, we’re breaking down some steps you can take to get your finances in order. As always, be sure to consult with a financial professional.
So, you’re struggling with debt. That’s okay! You aren’t alone. In fact, many Americans struggle with debt from car payments to their mortgage. First things first, you’ll want to stop procrastinating. Facing this problem head on requires ripping off the band aid and is one of the hardest steps. But once you get started, you’ll be on the right path to financial stability.
Where is your money going?
In order to make a plan for paying off your debt, find out where your money is going. Start a spreadsheet and label two columns – “Essential” and “Non-essential”. You need to find the minimum amount of money needed to keep a roof over your head and food on your table. Do this for a minimum of the last three months of bank statements so that you can properly identify patterns of where you spend money. Once you have your basic costs down (gas, rent/mortgage, food, medicine, etc.) start to figure out what non-essential items you can cut.
There are many apps out on the market, ranging from free (like Mint) to paid. It’s all about finding what tips and tricks work for you!
Okay, what’s next?
In order to pay your debt down, you’ll want to make payments that are larger than your minimum payment. Once you’ve cut down on non-essential spending, you can put that extra money towards that larger payment.
If you have multiple debts to pay off, figure out which ones to pay off first. Maybe you decide to pay off the highest interest loans first. Figure out a game plan and stick to it.
Make some phone calls
Next up, call the institutions that you are behind on payments with. You may be surprised to know that our good friends over at the IRS will pick up the phone and help get you on payment plans. And yes, they can be kind. Hiding from the problem only lets you get into a deeper hole.
Change your attitude
Don’t beat yourself up over debt. Yes, you made some choices, but you have the power to get yourself out. If you’re feeling overwhelmed start with some small moves. Maybe you start by paying $30-$40 above your minimum payment. When you start to chip away at a given task moving up to bigger payments won’t feel so scary. You can do this!
The Wolf Team
Whether you’re looking to pay off your debt for peace of mind or looking to get your finances in order to buy your dream home, we can help. If you need a referral for a financial planner just let us know. You can reach us at 858-722-6847 or use our contact form.