Free From Debt: 4 Steps to Start Today

Posted by Steph Perine on Sep 30, 2019

Free From Debt: 4 Steps to Start Today

Debt can damage more than your credit score. Overwhelming debt can interrupt your sleep and lead to stress-related health issues. Worries over debt can cause agitation and  rifts within families. The distraction can even lead people to make mistakes at work. Debt has the power to become the most pressing issue in your life and overshadow all other positive events.

An effective way to manage the psychological effects of debt is to break free from the cycle. Even the smallest changes, can create many benefits over time, to make debt (and your life) more manageable. Debt management is like a financial diet where you break bad habits and develop a fiscally healthier lifestyle.

Step One: Know Your Limits

Establish a realistic budget to determine what portion of your money is  available to put towards paying your debts. If your expenses are higher than your income, start looking  at what you can cut out. Dump anything that is not essential to your life like, i.e. cable television, junk food, and excessive clothes shopping.

Strict budgets can be difficult, but the reward is a less stressful life and more security for your family. It can be easier to cut expenses than to generate more income. Plus, you do not have to pay taxes on the money you save, such as from using coupons or a lower cell phone bill, as you would from more earned income. The total amount you save benefits you and your family in your overall financial management plan.

Step Two: Lower Your Bills

Contact phone carriers, utility companies, and insurance companies to see if they offer any plans or discounts that could shave a few dollars off each bill. Look at each bill for errors or for features your family does not need and contact the company to remove these items.

Many experts suggest people attempt to call their creditors and negotiate a better deal. Since people in debt are unlikely to have cash available, they are rarely able to refinance loans or negotiate with credit card companies. About 57 percent of Americans have less than $1,000 of cash available. A better solution is to find a resource that has experience resolving debt with creditors. An option to consider is a debt settlement company. Debt settlement companies work for consumers by negotiating on your behalf with your creditors. The companies strategically negotiate with creditors to settle your accounts for less than what you owe. This results in savings to you and in the future empowers you to  put away more money in the case of an unexpected expense

Step Three: Reduce the Excess

Americans love to spend. About two-thirds of the $11 trillion American economy goes to consumer goods. Spending is fun and it can feel good to make a purchase, but later it can have a negative effect if you become stressed and unable to sleep because you cannot pay your bills. Adhering to a budget, can prevent unnecessary spending.

Another way to reduce spending is to organize your house and clear out the unused and unneeded items in your house. This allows you to see what you already have and appreciate why you need a budget.

A yard sale or a sale through social media or a classified ad can generate cash instantly that can help pay off debt. Empty any storage units and save the monthly fee you once paid to store the items there. If you haven’t used something in years, chances are you don’t need it. Remove clutter so you can more easily find items you already own rather than buying them new.

Step Four: Automate Your Finances

The temptation to spend or to put off a bill goes away when you have less contact with your money. Sign up for automatic deposits of all your income. Set up checking accounts to pay recurring monthly bills each month, which will avoid late fees. Once your debt level begins to drop, put some extra cash in a savings account for that rainy day.

Time, effort, and knowledge will help you to break free from debt. Even if your debt comes from a job loss or a medical emergency, you have options available. At Century Support Services, we can help. Our debt settlement program enables you to have one affordable monthly payment toward paying off your unsecured debt, to improve your cash flow, and to start investing in your future. Contact us to learn more.