How to Start When Wanting to Pay off Debt


If you are in debt and you feel like you want to start paying it back then you may feel rather daunted by the challenge of it all. However, once you get started you should find that it will be a lot easier to know what to do. It is good to take some starting steps:

– Add up debt – you will need to start by finding out all of your statements so that you can add up how much debt you have. This is by far the hardest part of this but you need to do it. Look at all the different places that you owe money, such as for overdrafts, credit cards, loans and things like that. Then add up how much you owe in total. This can be very daunting but it is a really worthwhile step. Once you acknowledge your debt then you can move forward in trying to eliminate it.

– Look at interest rates and amount owed – now you need to look at each individual piece of debt. See how much each is for as well as how much the interest is on each one. If you are not sure of the current interest rates then you can get in touch with the lender and ask them. They should easily be able to let you know. Also consider any fees or charges that you pay in addition to the interest.

– Choose which debt to pay off – it can be much easier to pay the loans back one at a time. It is therefore worth deciding which you want to pay off first. It makes sense to pay the one with the highest interest rate off first because it is the most expensive. However, you may prefer to pay the smaller one off first as it will be gone quickly and that will feel more satisfying. There may also be personal reasons for wanting to repay certain debts over others and so it is worth thinking about the order you would like to pay them off.

– Cut up credit card – if you have credit card debt, then it is worth making sure that you do not spend any more money on your credit card if you can help it. It could be a good idea to cut it up, but if this is too difficult then at least remove it from your purse. You want to pay off the money owed on it before you use it again. If you are worried about buying things online without the payments being secure then set up a Paypal account as that is even more secure than a credit card and you can pay things directly from your bank account using it.

– Look at places to cut spending – it is really wise to think about where you can cut your spending. You may find this quite easy as you may see lots of things that you buy that you can do without until you have paid off your debt. However, for some people this will not be easy. Make sure that you concentrate on paying for the necessary things such as food, bills, rent etc and try not to spend on luxury items such as books, accessories, candles, cushions and things like that. Ask yourself before you buy anything whether you really need it and whether you need it right away or if you can wait and buy it once the debt is gone.

– See if you can earn more – it can also be a good idea to make sure that you look into ways that you might be able to earn more money. If you are having difficulty cutting down spending this can be a way that you will be able to repay debt still. You could also use it as a way to repay even larger quantities of debt on top of the money you can use form reducing your spending.

Once you have worked through these steps you should be in a position where you will be able to repay some of your debt each month. It may take time to pay off the first debt, but once you have done this you will have more money to pay the second as you will not be paying interest on that original debt any more. It can be very satisfying knowing that you are repaying your debts but you will need to keep focussing on it and remembering why you are working so hard and how great it will be when you are done.

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