If you are one of those non-savvy shoppers, who hand over their credit card without checking their bank account, you may find yourself in quite a bit of debt. Having that doesn’t make you a wrong person; it just means you have a little bit of learning.
Start by Calling Your Credit Card Company
If late fees and high-interest rates are keeping you up at night, there is a simple way to get yourself back on the right track with your finances. Ask, and you shall receive.
CreditCards.com reported on September 25, 2019, the majority of customers who asked for lower rates or forgiveness of late fees got precisely what they asked for. 86% of cardholders who contacted their credit card company and asked for more economical prices had their interest rates reduced.
Asking for lower rates or late fees to be waived may seem easy, and it is. But only 23% of credit card customers ask for their interest rate to be lowered.
Many cardholders accept the terms they received when they signed up just because they don’t realize all they have to do is call the credit card company and kindly ask for a little bit of help.
It can be intimidating to call a big financial company. But all they can say is no. You’re not going to have to schedule a fancy phone call with the chief financial officer of Discover Card. You’ll call and talk to a customer service agent who you will probably never speak to again if they say no. You have exactly what you have now. If they say yes, you might be able to save hundreds or thousands of dollars a year.
If you’re dragging your feet when you think about making the call, imagine a friend offering to pay you a couple of hundred dollars a month or even thousands of dollars this year to make this phone call. When you think about it in this way, you might be excited to pick up the phone and make the call.
One of the first things you must do to get yourself out of debt is to take some time and understand exactly what kind of financial shape you are in. Getting yourself out of debt is a journey.
You wouldn’t set out on a trip from St. Louis to New York without mapping it out. Getting yourself out of debt is no different than any other journey.
Know Where You Stand
If you’re deep in debt, it may be tempting to crawl back into bed, pull the covers over your head, and worry about your finances later. Our minds are wired to avoid big problems as a coping mechanism. But here’s the thing, preventing severe issues only makes them worse.
When you finally choose to tackle your debt had on, you’ll probably feel your stress levels instantly drop. Take a stroll down memory lane and think about most tasks you’ve avoided. If you think back, you’ll realize they weren’t that bad once you stopped avoiding and started working on them.
Round up all of your bills and past-due notices, and figure out exactly where you stand. If this is too much to handle, try breaking it down. First, take the step of rounding up all of your bills and putting them in one place. You can go through them as the next step.
If you know you’re likely to avoid even starting, here’s a productivity hack to get you moving in the right direction.
You can make an appointment on your calendar. Pick the exact date and time you are going to start getting a picture of your financial health.
What to Pay First
It can feel like an impossible balancing act to set aside enough money to live on while still putting money toward your debt. This financial balancing act gets a lot easier once you know what your weekly or monthly budget should be.
Go through your receipts and credit cards to see where your money is going once you know what you’re spending money on developing a realistic budget for the week or the month.
Once you know what your expenses are, look for things you can cut out — for example, spending five dollars for coffee every day on your way to work. Cut it out by bringing your own coffee in a travel mug.
When you’ve figured out how much money you can put toward paying down your debt, start paying the bills with the highest interest rates first. You’ll have to pay all of your bills in the end. Knocking out the laws with the highest interest rates first will keep more money in your pocket every month.
Find Ways to Make Extra Cash
Paying down debt is hard. Now I’m telling you to start making extra money. You probably feel like you have enough on your plate and don’t need someone telling you there’s something else you need to do.
Making extra money may not be as tough as you might think. One avenue many people think about is asking for a raise at your current job.
Depending on how much time has passed since you started your position, you may have developed a skill set that is quite valuable to your company. If you can prove your value, your company may be willing to bump up your pay.
You can also find another opportunity within your organization that would give you a bigger paycheck. And as scary as it may sound, needing to pay down your debt may be just the thing to push you to go after the job of your dreams. Just make sure you have the new job completely locked up before leaving your current position.
It seems like everyone has a “side hustle” these days. Starting a small side business can help you pay down your debt faster. Take some time to brainstorm about how you can turn the skills you have into money making opportunities. Are you good with spreadsheets; could you help small businesses by building their worksheets on the side?
Do you have a friendly camera; could you make money doing photography for friends in your spare time. Make a list of your skills and abilities. No doubt, you have talents that can help you bring in some extra cash.
Starting anything new can be an intimidating task. Committing yourself to just starting a job for 10 minutes can be a great way to get yourself going. Give yourself the option to stop or take a break after the first 10 minutes. Chances are, once you force yourself to start, you’ll feel relieved. Even though you’ve permitted yourself to quit after the first 10 minutes, you may be glad you got going. You may choose to keep pushing forward.
Set Your First Target
A goal with not having a deadline is nothing but just a dream. After you have a clear picture of what your finances look like, set a series of small goals to guide you down the path of becoming debt-free. Be sure to set deadlines with each of your goals. Periods will allow you to judge how close or far you are from accomplishing your goal.
7Your goals should set you up for success. It’s a good idea to make your first couple of goals small and easy to accomplish. This helps you build momentum. Collecting small wins helps to build your confidence and push forward toward bigger goals.
If you are deep in debt, you’re going to have some serious work to do to wipe the slate clean. This is where setting goals can become tricky. You don’t want to set monsters’ goals and try to force yourself to put forth a superhuman effort to reach every goal. However, you don’t want to set the bar too low, or you won’t take your quest to become debt-free seriously.
Find the right balance between setting goals that are attainable yet challenging.
Expecting perfection on your journey to get out of debt is a recipe for failure. Be firm but kind to yourself if you fall short of one of your goals. Beating yourself up and stopping will likely only drag you further into debt. Pat yourself & enjoy the victories along the way. Reward yourself for the goals you accomplish.
Check Your Progress Regularly
Let’s re-examine the trip metaphor. You wouldn’t pull out of your driveway, toss the GPS in the backseat, and never look at it again. Getting out of debt is the same way.
Make appointments on your calendar to check your progress every couple of weeks or every month. Life is full of twists, turns, and unexpected bumps in the road. Making time to check out how you are progressing regularly is the only way to make sure you’re really on the right track.