(Newswire.net — October 17, 2018) — From small, innocuous loans to full-blown debt crisis, being burdened with debt is something that a large proportion of individuals and families have to contend with on a daily basis. According to the 2017 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling, or NFCC, two out of every five households carry credit card debt from month to month.
Beyond the financial issues inherent in debt, it often translates to emotional stress as well, degrading your ability to function optimally at work and even undermining relationships. If you’ve set out to pay off all your debt and have considered a consulting firm, here are five strategies you can begin implementing immediately to stave off all the negative effects:
1. Evaluate Your Cash Flow
The first step in getting a handle on your debt is to take the time to thoroughly evaluate your income and what you regularly spend money on. That’ll give you a clear picture of exactly where you are financially. Without this step, you’ll basically be working blind. Be sure to get as granular as you can, since even small figures can accumulate over time and make a big dent in your finances.
2. Cut back on Costs
After identifying how much you have to come in and what you’ve been spending money on, the next course of action is to reduce your expenses by reducing what you spend on certain items and eliminating any costs that you can. Dining out is one thing that often takes a lot of funds, for many people, so check if that’s an issue in your own case. You’ll also need to make sure that every expense is included in your comprehensive expense tracking plan, for which you can download an app on your mobile phone.
3. Use the Law
Every state in the U.S. has specific rules regarding what the maximum period is for a debt to be collected or for the creditor to sue. Go through the law and find out if any of your old debts have elapsed in accordance with the statute of limitation. If you find any, you will be able to forgo repayment without worrying about financial, legal or credit consequences plaguing you. Also, take the chance to learn as much as you can about whether an IVA would be good for you.
4. Negotiate
Your creditors want you to pay off your debt, which is the same thing you want. Since that’s the case, you can call them up and negotiate better terms on the debt, especially if you have maintained a good relationship over the years. Be prepared with figures and a payment plan you can use to convince them and you just might get a reduction in the interest rate. Do the same thing with every creditor and at least some are likely to concur.
5. Pay Your Debt Progressively
There are two popular methods for gradually pay off debt – the ladder method and the snowball method. In the former, you go from the biggest to the smallest while you do the reverse in the latter. Both have their pros and cons but the ultimate determinant is which one makes you feel more motivated. Choose your approach and keep in mind that you’ll also be successful in paying off the debt if you’re consistent.