Many Americans have found themselves in an overwhelming amount of debt since the recession stormed its way through our economy. If not properly handled, that debt can quickly grow out of control, and end up really putting a kink in your future.
Don’t allow yourself to become a victim of such life-altering debt. If you’re not even sure where to begin to achieve such a goal as getting out of debt, you’ve come to the right place. Here are a few suggestions to get you started on your journey to financial freedom.
Stop digging the hole deeper
To get out of debt, you must first stop creating new debts every month. Get rid of any store cards you may have. Cut them into pieces, and throw them away. While you’re at it, you should probably even get to cutting on your credit cards too! Only save one credit card for emergency situations, but that is all you should have. Once you stop building your debt, you can begin paying it down to a much more manageable amount.
Start tracking your spending habits
Go get yourself a three ringed binder, and begin keeping copious amounts of notes on your spending habits. Write everything down. If you buy a piece of ten cent bubble gum, write it down. Too often, people go through their paycheck in the blink of an eye, because they don’t pay attention to all of the small transactions they rack up. Once you find a rhythm in your spending habits, trim the fat. Write out a detailed budget for your next paycheck, and make sure you follow it. Otherwise, your efforts are in vain.
Implement the envelope system
The envelope system concept is simple. Lay out a few envelopes, and categorize your weekly or monthly expenses. Maybe you could have an envelope for bills, rent, family night, and date night. Whatever you deem important enough to warrant its own envelope, mark it and set it. If you have a family, involve your whole family in this process. When you make such a big deal out of the creation of the envelope system, you have also then created your own accountability. Kids will be the first to tell you when you’re breaking the rules.
Pay down scattered debts
The first place you should start is your credit report. You get one free report per year, so grab it up, and look over it in detail. Any charges that are unbeknownst to you should be disputed. If you don’t know very much about that process, there are plenty of lawyers ready to help you sort it all out. Once you’ve pinpointed the debt that is actually yours, you can then begin paying down the small amounts.