The path to eliminating debt, much like the path to enlightenment, can be a road filled with obstacles, traps and pitfalls, or a freshly paved lane with nary a bump. However, unless you have a mystical method of foretelling lottery numbers, or unless your favorite rich uncle is on his death bed, you will need some kind of strategy for becoming debt free. Too often, going deeper into debt makes it ever harder to get out. Missed payments cause interest rates to increase, raising your monthly payment at the worst possible time. Let’s look at a couple ways with which to get rid of your debt once and for all.
Most people with heavy debt burdens created their debt by utilizing a variety of credit products: cards, car loans, personal loans and more. For those with organizational problems, this profligacy makes missing a payment more likely, due to the sheer number of bills coming in. Moreover, psychologically, it can be isolating to think of yourself as one person battling several creditors. Consolidating your debt into one monthly payment can be more effective. Though you will end up paying the consolidation company a fee for doing so, they’ll be able to negotiate lower interest rates with your creditors and suspend late fees and over limit fees. In the end, consolidating will probably save you more money than it costs.
2. Limit Spending
Force yourself to list all of your monthly expenditures: car payment, house payment, cable bill, babysitter – everything. Once it’s all on paper in front of you, you must accept the reality of how much money is going out every month, and you’ll find it easier to reduce or eliminate certain items. However, if you don’t take this step, it will be harder to do. Looking at your expenses in the light of day gives you more power over them.
