10 Steps to Help Minimize Debt

By Keren P. — Published February 07, 2018

10 Steps to Help Minimize Debt

Using a credit card can make life so convenient, but one day you find yourself in debt. The problem with financial debt is that it creeps up on us when we are least expecting it. What appears to be perfectly innocent spending accumulates into a credit card bill that we simply can’t pay off.

Getting into debt seems almost effortless but getting out of it can be a daunting task. By following the steps mentioned here, you can help yourself minimize your debt and even get debt-free eventually.

Steps to minimize debt

1. Be aware of the situation
Before you can start getting yourself out of debt, you need to be clear about your situation. Make note of all the areas where you are in debt and what amounts need to be paid back.

2. Stop putting yourself in debt
Once you know where you stand with your debt, it is important to stop creating more debt. Stop using your credit cards altogether if possible.

3. Reduce spending
Even if you are not using your credit card, you need to try and cut down on your overall spending. Cash saved on things you haven’t bought can be put towards paying off your debt.

4. Concentrate on paying off one debt
Rather than just paying the minimum required amount on your debts each month, try and pay them off one at a time. Choose one debt that you can eliminate in the next few months and put bigger amounts towards that. You will still need to pay the minimum amounts of the others, but one by one, you can eventually pay them all.

5. Ask for lower interest rates
With the interest building up over time, you could spend quite a bit more money paying up you debt than if you paid the full amount each month. Talk to your credit card company and ask them if they can reduce your interest rates.

6. Create a payment plan
Make a chart of your total income and subtract all your expenses from it. Your expenses would include your monthly groceries, utilities, and so on. What you have left is money that you can use to pay back your debt. Make a plan as to how you need to distribute that money between your various debts.

7. Earn more
If your monthly salary is just not covering your debt payment, you are going to have to find ways to earn more money. Taking up a second job or having a garage sale could help you bring in a few more dollars that could go towards paying your debt.

8. Dig into your savings
Although not an ideal solution, if the need arises, then you might want to think about taking part of your savings to pay your debt. If it is a retirement fund you plan to withdraw from, first, be sure to check if the amount is taxable.

9. Life insurance
Cashing in on a life insurance policy could also help get you out of a tight spot when you are in severe debt. Do your research and be clear on all the pros and cons of prematurely withdrawing from your policy before you go ahead with it.

10. Statute of limitations
The statute of limitations for paying back debt varies from state to state, but in most cases, it is about seven to ten years. Check the rules and regulations according to your state and see if they allow you to let go of some of your older debts.

It might take a little time, but with dedication and following these steps, you can minimize your debt for good.

Related Articles