Debt can sometimes be overwhelming, and we tend to get discouraged when facing it. As it can be a daunting thought to decide to address the issue head on. Though it might be a very difficult task, once you decide to get out of debt, you will need to commit to a plan.
Here are some steps that you can take towards your debt-free journey.
Step 1: Write down all your debt
You will need an accurate portrait of the extent of your debt situation. This means gathering all your statements: your credit card statement, bank statements, etc. Make you to include any other dues such as student loans, car loans, and so on. Note the interest rate on each of those. A credit card debt will probably charge a higher interest rate than a student loan for example. Finally, note your minimum payments required.
You really need to make a complete list, from top to bottom. This is a painful but necessary step to getting out from under it.
Step 2: Create a budget
Writing a budget can be a tricky thing. It can be trial and error. You might need to go back and forth and adjust as you go.
If you are going to be committing to a debt-free journey, if you are serious about wanting to get out of debt, you are going to need to make a budget and stick to it. To do so, you will need to track your spending.
One method you can use to determine your spending, is to go through your bank and credit card statements to make an average.
Step 3: Keep track of it
To make sure you are following your budget, you need a tracking system. This can be a daily check in, referring to a chart you have made, or using a specific system like the envelop system.
Using a cash envelop system, you will get a visual and concrete tracking of all your spending for each category.
Step 4: Sell stuff
Because your goal when going through a debt-free journey is to be able to have extra income at the end of your budget that you can throw toward your dues, selling things might just be a great way to get that going. The added benefit of decluttering your house is just a happy collateral benefit!