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Having a large amount of debt can be a very stressful experience. Eventually, it may feel like you've given up. You have so many bills with such high interest that it may seem like you'll never be debt free again. Thankfully, there are ways to get your debt back under control. Simply use the following debt advice.
First, you need to do some planning. The most important part of this planning is making a budget. Start by gathering together all your different bills. You should then prioritize those bills. All debt needs to be paid off eventually. However, certain bills are more important than others. Bills that are given a higher priority should be the first to be paid off. These should include things like utility bills, mortgage payments, credit card bills, and car loans.
Next, you should try to change the behavior that created the debt in the first place. Stop all frivolous spending. Instead of buying things you want; try to only buy things you need. This kind of self-control is important. You're going to need to put extra income towards paying off your debt. You should stop spending money that could go towards paying off your debut on things you don't really need.
Third, you could try consolidating all of your different credit card bills into a single fixed rate loan. Having one bill may be much easier for you to handle. Even better, there is a possibility that the interest rate over all will be lower. This way you can pay off this debt faster. Alternatively, paying off credit card debt by making individual minimum payments could take years.
Now you'll need to start actually paying off your debt. Work hard to pay down your balances as well as the principal on your debt as fast as you can. You want to get your debt down to a healthy level. A ratio of 36 percent debt versus income is considered a healthy amount to have. However, it's better to have even less than that.
As you try to pay off your debt, you should also be saving some of your income. Try to save at least 10 percent of every paycheck. You will need this money for emergency expenses such as repair work or sudden health bills. If you don't have this money saved, you may instead end up charging it to your credit card. This will just create more debt and make your path to financial freedom much slower.
Another thing you will want to avoid completely is paying your bills late. First of all, paying bills late can have a devastating effect on your credit. Even worse, it will drive you deeper into debt. For example, if you paid your credit card bill late each month for a year with a late fee of $40, you would rack up $480 in new debt.
Lastly, you need to keep planning so you can stay one step ahead of your bills. Purchase a binder you will use for your financial planning. Inside this binder, place the budget you created earlier. Update this budget to keep it current as you pay off your bills. Also insert a pay schedule so you can stay prepared every month.
