I believe that our money is a tool for us to use to better our lives. So we can live the dream we’ve always had, retire comfortably, provide for our family and have less stress. But to be able to fully use our money to our benefit, we need to know where we are on our financial journey. Knowing where you are also means being honest about our debt.
Facing our debt situation can be intimidating and overwhelming, but avoiding it doesn’t help. Ignoring our situation only makes it worse. We need to take inventory of our debt, list out everything – how much we owe, who we owe and the interest on each. Then we can create a plan of action to tackle our debt.
Here are the steps you need to take to be honest about your debt:
ONE: Write out all of your debts on a piece of paper or in an Excel spreadsheet. Here’s the info to include: who the debt is owed to, the amount owed, minimum monthly payment, interest rate, due date.
TWO: Prioritize your debt. Take a look at your list. Are there any debts that could be easily knocked out? If so, make it a plan to pay them off within a month or two.
You need to rank the rest of your debt in order so you can focus on one at a time. When you have too many irons in the fire it can be overwhelming. So you need to break it down debt-by-debt. Work on paying one off and then move to the next.
THREE: Make sure you’re paying something. It’s important to not ignore your debt. You need to take care of the most important or high-priority ones first, but that doesn’t mean ignoring others.
FOUR: Ask for a lower interest rate. If you have a good history of making payments on time then you might be able to ask for a lower interest rate.
Getting out of debt can make you feel free. No more ties to credit card companies, no more monthly loan payments need to be made and so on. The most important step in getting out of debt is deciding to do something. Then you need to follow-through.
If you need help with your debt-reduction strategy, give us a call. I’m here for you. Give us a call at 573-686-3053 to schedule a time for us to get together.