5 Tips For Getting Rid Of Debt Without Bankruptcy

Posted by: KHTS Articles in News Articles December 8, 2020 - 11:33 am 1 Comment 353 Views

Getting rid of debt can often seem like an impossible task when you are in debt. However, as impossible as it seems, you can get out of debt if you know the right steps to take and the tips for leaving your debt behind.

If you are struggling with debt, you are not the only one. research by the Pew Charitable Trusts shows that 80% of Americans are in debt. If you want to leave the burden of debt behind, then you are going to need to have a consistent plan. It is not just about having a plan but also staying committed to using that plan in order to see considerable improvement.

Tips for getting rid of debt

Understanding the bankruptcy option taking a Chapter 7 means test calculator to estimate qualification or a Chapter 13 calculator to estimate payment plan can be helpful. Many people would like to avoid bankruptcy at all costs. Paying debt doesn’t have to be complicated, but with every other good, yet often difficult, things in life, you just need to be focused.

Here are tips that if engaged, will help you be debt-free:

1. Creating and managing a budget

A budget is an organized and updated list of your income and expenses. The very first step to taking charge of your finances and being debt-free is to have a budget. With a budget, you can have a good view of areas where you can save and put that money towards paying off debt. A budget will also help you know when there is a source of wastage that’s making you spend more than necessary.

It’s best to create a monthly budget since debt payments are also due monthly. This way, you’ll know exactly what you need, and whether you should seek ways to increase your income.

There are budgeting apps that can help make the task easier. You should get one that is made for beginners if you’re just starting out. You can combine your budget with a free debt payoff planner app. For this you may look up the best debt payoff app 2021 as we approach the new year.

2. Reducing your monthly expenses

Adding a little bit more to your monthly debt payment can help you reach debt freedom faster. The perennial problem is that extra money doesn’t just appear, and the best way to achieve the same effect is by cutting back on your monthly expenses.

But how do you know which part of your expenses you should cut back on? You’ll have to go back to your budget in order to perform a well-detailed analysis. Categorize your budget into essential and non-essential expenses, and then reduce what you spend on non-essential expenses.

For instance, if after carrying an analysis of your non-essential budget, you realize that you’re spending $200 monthly in eating out, you may have to cut down on your expenses in that area. In addition, if your monthly data usage doesn’t come close to your monthly data plan’s maximum use, then consider applying for a cheaper data plan.

3. Having an emergency fund

Making significant effort to get out of debt without having funds for an emergency may make you run back into debt shortly after leaving it behind. For example, if you put all that effort into paying the debt, but your only vehicle suddenly needs an expensive repair, what would you do? A credit card may be your only option if you don’t have an easily accessible cash.

To build your emergency fund, you’ll have to see your savings fund as a bill. With a myriad of things to expend your money on, you’ll have to be resolute in your decision to have an emergency fund. Make contributing to your emergency fund a compulsory monthly expense.

4. Hide your Credit Card

You can’t keep adding to your credit card debt balance and hope to get out of debt soon. Consider leaving your card at home when you’re going out. You might also consider hiding your credit cards or putting them in more inaccessible places. Decline the temptation that’s attached to saving your payment information with an online retailer. Saving your credit card info with them can cause more shopping than is necessary. In other words, try to put more friction between yourself and using your credit card.

Interests on credit cards are pretty high. A personal loan may be an option. As such, it should be your last option if you require an emergency fund that’s beyond what you have in your savings.

5. Set Financial Goals and Milestones

It’s important that you have some financial goals for yourself. It’s easy to get distracted, thus, it is crucial to set goals to help keep you focused.

You should also have milestones for debt payment, and try to celebrate those milestones once you’ve reached them. For example, if you have a milestone to pay $1000 off your credit card before Christmas day you can celebrate this milestone by treating yourself to ice cream. Celebrate yourself for fulfilling a milestone, but ensure that your celebration is as frugal as possible, being careful to maintain responsible and hopefully reduced spending.

In Summary

Filing bankruptcy with a local bankruptcy attorney in California may not be your desired option, so hopefully one of these 5 tips can help you eliminate debt effectively. Debt is one of the major causes of stress, anxiety and some other issues. In addition, it affects almost every area of one’s life. As such, it is vital to equip yourself with the right tips in order to get out of debt. With enough determination and knowledge, you can be debt-free in no time.