How to Attack your Debt

If you’re going to attack your debt, you need to map out what you owe and how much you’re currently paying each month.  You may have debts in different places, like, student loan, line of credit with the bank, or even a department store credit card. If you’ve got multiply debts, it can be easy to forget how much you actually owe altogether, what the different interest rates are, and how much you’re paying into each debt every month.
The problem is when you don’t know exactly what you owe and how much it’s costing you, it can make you feel overwhelmed, frustrated and disorganized. Reinforcing your worst fears that you are bad with money. What you need to do is to map out your debt, all of it. Mapping out your debt will get you organized and then you’ll feel more in control. Make a list of all your debt on paper, make four columns. The first column will be a list of all the names of your debt, (ex. personal loan, line of credit, credit loan, student loan). Next column, write the amount owing. Next column, interest rate, and the last column the minimum payment.

Not only do you see the total amount of debt, but you’ll be able to calculate the total monthly minimum payment.. Your total monthly minimum payment is the sum of all your minimum payments smushed together. It’s what you have to pay towards your various loans each month, whether you like it or not.
Now, when you add your debt it comes out to be $30,850 and your minimum payments when you add them all together, comes out to be $625.00.
The point of mapping your debt like this is to make sure you know exactly what your starting point is and the amount of money you must pay each month versus the amount you choose to pay each month. That‘s where the magic happens.
To see it, acknowledge it. It makes it real. And that’s the power of the Debt map! Taking stock of and organizing your debt is a crucial step to creating a sustainable, realistic Debt Plan.
You need to know how much you owe, what you’re paying in interest, and how much your total monthly minimum payment is. This will give you control, putting you back in the driver’s seat again.
It’s a relief to know exactly where you stand, the good and the bad of it, you need to face it head on.

How To Create Your Debt Map

Step 1: Make a list of all your debts.

Step2: Confirm exactly how much money is owing for each account.

Step3: Confirm the minimum payment for each debt.

Step4: Confirm the day of the month that your payment is due, so you don’t miss a payment.

Step5: Organize all this information in a debt map grid so that you can see it in one spot.

Step6: Prioritize your debt by interest rates with the highest first.

Step7: Calculate your total debt.

Step 8; Calculate your total monthly minimum payment.

Now that you’ve drawn your Debt Map, you need to calculate how much your daily life costs. Only then can you start to calculate what you can realistically put towards debt on top of the total monthly minimum payment.

Getting out of debt requires a combination of strategic planning, budgeting, and disciplined financial habits. Below I listed a few more helpful steps to take, to get better control of your financial matters.

• Assess Your Debt: Make a list of all your debts, including the outstanding balance, interest rates, and minimum monthly payments. This comprehensive overview will give you a clear picture of your financial situation.
• Create a Budget: Develop a realistic budget that outlines your monthly income and all necessary expenses. Allocate a portion of your income to debt repayment while ensuring you have enough for essential living costs.
• Cut Unnecessary Expenses: Identify and cut non-essential expenses from your budget. This can include dining out, subscriptions, and impulse purchases. Redirect the money saved towards your debt repayment.
• Prioritize High-Interest Debt: Focus on paying off high-interest debts first. Allocate extra funds towards the debt with the highest interest rate while making minimum payments on other debts. This strategy minimizes the overall interest paid.
• Consider Debt Consolidation: Explore debt consolidation options, such as a consolidation loan or balance transfer credit card. Consolidating multiple debts into a single, lower-interest payment can simplify repayment.
• Negotiate Lower Interest Rates: Contact your creditors and negotiate lower interest rates. A lower interest rate can significantly reduce the overall cost of repaying your debt.
• Build an Emergency Fund: Establish an emergency fund to cover unexpected expenses. Having this financial buffer can prevent you from relying on credit cards or loans during emergencies, further contributing to debt.
• Generate Additional Income: Explore opportunities to increase your income, such as a part-time job, freelancing, or a side hustle. The extra income can be directed towards debt repayment.
• Snowball or Avalanche Method: Choose a debt repayment strategy that suits your preferences. The debt snowball method involves paying off the smallest debt first and then using that momentum to tackle larger debts. The debt avalanche method focuses on paying off the highest-interest debt first.
• Seek Professional Advice: Consult with a credit counseling agency or financial advisor for personalized guidance. They can help you create a debt repayment plan, negotiate with creditors, and provide valuable financial education.
• Avoid Taking on New Debt: Resist the temptation to take on new debt while repaying existing obligations. Cut up credit cards or limit their use to emergencies to prevent further accumulation of debt.
• Sell Unnecessary Assets: Consider selling unused or unnecessary assets to generate additional funds for debt repayment. This could include items like electronics, furniture, or clothing.
• Track Your Progress: Regularly monitor your debt repayment progress. Celebrate small victories and stay motivated by visualizing your journey toward becoming debt-free.
• Educate Yourself: Invest time in financial education to improve your money management skills. Understanding personal finance principles can empower you to make informed decisions and avoid future debt.
• Stay Persistent: Getting out of debt is a gradual process that requires persistence. Stay committed to your debt repayment plan, and remember that small, consistent efforts add up over time.

Getting out of debt is a challenging but achievable goal with careful planning and dedication. Tailor these steps to your specific situation and seek professional advice if needed.