Best Workaround to Get Out of Debt

When you are neck-deep in debt, you may feel that getting out of it would be next thing to impossible! But when you have the will to level up and pay your debts, you would always find a way.

Assess your lifestyle, adjust your spending, look for additional jobs that can augment your funds. Make a list of what you owe. Here, you can start by following these steps:

> How much do you owe? – It may sound like an easy thing to write, but this can be a difficult part as you may be still in denial. Pick up your pen and paper or make a spreadsheet and be realistic about it. Create a cash-flow calendar to get updated with how your spending is.

> Use cash in spending – Paying with credit card seems so easy to deal with; BUT, when you use the hard-earned cash, you will create some sort of awareness and value of your money.

> Create a rule with payments and spending – If you want to come up with a debt repayment plan, you need to set a goal or plan which is attainable and sustainable. Lessen rather than cut on spending. From the amounts you shave-off from your spending, make a record and assess how much you saved, and you can use to cover for your repayments.

At the end of every month, you will notice how much you saved from non-important purchases, and covered the amount needed for repayments, and interests you saved.

> Negotiate to reduce your rates – You can ask help in making this plan to work. Ask your lenders to assist you on how to reduce your interest rates. Perhaps you could arrange for a certain rate balance transfer of 12 month at 0% annual percentage rate and paid off within a year. Or you can just call in to inquire if you could reduce your annual percentage rate.

> Stop lending so much money to your federal/government taxes – Every month, an amount of your pay goes to your taxes. And annually, you get a tax refund. It’s just like lending your money to the IRS interest-free.

Rather than paying on your debt every month while the government gets your money, you should be using that cash toward your debt. You can put your money back in your pocket by adjusting your withholding on a W-4 Tax form. Refer to the government’s withholding calculator to figure out how many allowances you should take. File your new W-4 to your HR department and give yourself a raise.

> Ask for a professional assessment - If you are having difficulty on debt or are really unable to make payments on what you owe, you may need professional help. Credit counseling can be especially useful if you’re struggling with student loan debt or medical debt, not just credit card debt.

Author: Michael Welter

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