There’s nothing like dealing with debt. It can be such a crippling ordeal. So many professionals are plagued with the reality of their student loan debt and it is directly impacting their ability to purchase homes and move forward in their lives. Fortunately, there are ways to climb out of debt. Consider these four tips to help you move forward and live a different life.
1. Assess the situation.
Take a good look at how much you owe. It’s important to get all of the information from all of the debt collectors you owe. It might be a good idea to consider the assistance of a law firm like Tully Ricnkey Law. If you need to file for bankruptcy, get legal advice and make sure you’re legally covered, Tully Rinckey and other lawyers offer services to help you through it. The key is to be completely transparent about everything you owe and understand exactly how you’re going to tackle this issue.
2. Get a part-time job.
In order to eliminate the debt you currently have, there needs to be an increase in cash flow. Once you have more money coming in, put it all toward the debt. As you proactively pay off the debt with the surplus, you’ll be able to get rid of the debt at a quicker rate. Keep in mind that your part-time job doesn’t have to involve standing behind a cashier to ring up customers. You can work from home as a freelancer. You could create and sell a product. There are so many ways to create part-time income.
3. Create an emergency fund.
As you continue to put your surplus towards the debt, it’s also wise to create an emergency fund of at least $1,000. When it rains, it pours. It seems like when you don’t have the extra cushion, that’s when all hell breaks loose. If you have a financial cushion, you’ll be able to approach the financial situation with a completely different mindset. It’s best to create the emergency fund first. Once it’s fully funded, put all of your efforts toward eliminating the debt.
4. Implement an aggressive approach.
While you want to still live and enjoy your life, it’s important to implement an aggressive approach. You might get tempted to take the surplus money and spend it on other things: clothes, vacations, etc. Unfortunately, many people get lost in the process and lose sight of the goal. After a few months of sticking with the financial discipline, they become lax. The key is to create a budget. In the budget, you get to create the line items. You decide where your money goes. With your regular budget (outside of the debt), you should have line items for the rent/mortgage, utilities and food. You should also place line items for saving, the family vacation and weekly spending money. Be aggressive with tackling the debt, but don’t forget to live your life. When you maintain a sense of normalcy, you won’t feel deprived and you’ll be more likely to reach the goal of debt elimination.
Once you implement these tips, it’s really important to remain focused. It can be tempting to give up when it gets challenging. However, there are rewards on the other side of your discipline. If you really want to get out of debt, know that you can. It’s just important to stick with the process and create a snowball effect. Once you get started and keep the momentum going, you’ll be debt-free before you know it.
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