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5 important first steps to take if your debt seems too high to manage


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For most people, debt is inevitable. Your mortgage is debt. Your car loan. Your student loan.

According to the Equifax credit bureau, we can consider these examples, in most cases, to be “good debt” because they can help us build our wealth. Home values ​​will go up, which will earn us money. Student loans pay for our education, which will lead to better career options and higher salaries. And this car takes us to school or to work.

Then there are “bad debts” – credit cards and high interest loans that you can’t pay off. And when the debt becomes much more than your salary can handle, the debt can seem unmanageable. It’s time to act.

But where to start ? By looking at your debt not as a huge number, but as a collection of small payments that can be made.

“It’s easy to get overwhelmed when you look at the big picture, like the total amount of debt you owe,” said Jake Hill, CEO of Debt hammer. “One concept I learned playing sports as a kid was to avoid focusing on how many points you need to score to win, especially if your team is far behind. Instead, focus on the next point at hand, then the next and so on. It keeps you from feeling overwhelmed by focusing on the here and now.

“I discovered that this concept also applies to the fight against debt. Instead of insisting on the total amount you owe, focus on your next payment, then the next, and so on. Dividing it into smaller pieces can make it a lot more manageable. “

But this change in attitude is just the start of managing your debt.

Read: 10 ways to bounce back from a month of spending big on your credit card
See: What not to do when trying to get out of debt

Determine what you owe

If you’ve put those bills aside knowing you can’t pay them, it’s time to open the envelopes, collect your statements, and review them.

Adem Selita, CEO and co-founder of The Debt Relief Company., recommend putting everything on paper or on a spreadsheet to see where you are at.

When your debt gets to the point that you feel like it payments without knowing where they are going and if they are really making a dent in your balances, you have to analyze your accounts one by one and put everything on paper, ”said Selita. “Your main priority should be to analyze and understand your current situation. Realistically, if you don’t understand your situation, you can never handle it better.


Take control of your finances – you work hard for your money. It’s time to make your hard money work for you. Schedule a free call with a certified financial trainer to get started!

Also, organize your debts by due date, so that your payments are not late.

Audit your expenses

Now that you know what you owe, it’s time to figure out where you can find the money to start making payments.

“Do spending audit, ”said Steffa Mantilla, Certified Financial Education Trainer and Founder of the Personal Finance website Money tamer. “In this audit, you will need to create a rudimentary budget of all your monthly expenses. For the debts you have, also indicate the minimum amount of their monthly payments.

“Once you have this information, compare it to your expenses. You may find that you are spending way too much money to eat out and be entertained when it really should be used to pay off your debts. “

Negotiate new payment terms

Mantilla, who said she and her husband have paid off $ 80,000 in debt over five years, said if your expense audit shows that you just don’t have enough money to pay off your debts, it is time to try to negotiate new payment terms.

Start calling each debt account to see if it offers a temporary deferral or the option to temporarily suspend payments due to difficulties, ”she said. “This will keep you posted on all your bills, but give you the option to pay off some of your small debts first. If you can suspend payment on a debt, put all the money you were going to pay on that debt to the smaller debt. You want to take advantage of this grace period to pay off as much debt as possible. That way when the deferral ends, you will now have the money in your budget to pay for them. “

She cautioned that you also need to be disciplined.

“This method is a good way to avoid your debts collections. But you have to stick to the plan. If you instead spend the freed up money on consumer goods instead of paying down your debts, you will be in a much worse situation once the debt payments start again.

To find: 17 Biggest Budgeting Mistakes You Make

Keep your focus

A lot of people are overwhelmed with their personal finances because there is so much to focus on – paying off credit cards, student loans, saving for retirement, buying a home, etc. Said Brian Walsh, Senior Executive and Certified Financial Planner at SoFi. “People want to feel like they are making progress, so they allocate their focus and resources to all of these goals. It might sound logical, but it’s the exact opposite of what we recommend. By focusing on one goal at a time, you will progress faster and progress will lead to persistence.

To find: Why you should start budgeting now for 2022

Hire a support person

Sha’Kreshia Terrell, Personal Finance Educator with Humble Hustle Finance, had one last tip: take someone on the trip to get out of debt with you.

“Having an accountability partner can ease load times 10. They can help you keep the vision of a debt-free life in mind when times get tough, ”she said. “The vision of you living a debt-free reality is motivating for the human spirit. … Remember to include your accountability partner every step of the way.

Remember, paying off your debt is a marathon. The debt did not increase overnight, nor will it be paid off instantly. Following these tips can help you have a debt-free future.

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Last updated: November 1, 2021

About the Author

Jami Farkas holds a communications degree from California State University, Fullerton, and has worked as a reporter or editor for dailies across the United States. She brings to GOBankingRates her background as a sports writer, business writer, religious writer, digital writer – and more. Passionate about real estate, she passed the real estate license exam in her state and still wonders whether to get into selling homes – or just writing about selling homes.


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