How to get out of debts (once and for all)

If you firmly decide to get rid of debts, you will succeed. This is possible, assures the business collection Michael Leonard. The zeroing of financial obligations, like any big goal, requires a clear plan: to determine where you are now and think over the necessary steps.

First you will need a complete picture of the current situation. If you write down how much and to whom you owe it, it is much easier to plan payments. Perhaps, looking at the amount, you will find that everything is not as scary as it seemed.

Where to begin?

1. Admit that you got into debt

Before you take up the technical part, give yourself time to realize that there are debts, but you want to say goodbye to them. Forgive yourself all rash purchases, expired payments and spontaneous expenses. At first it will hurt, but through this you need to go through.

2. Make a control statement

Oddly enough, very few keep records of their debts. Most likely, such frivolity is explained by the unwillingness to feel guilty, but if you do not pull yourself together, getting out of the debt pit is almost impossible. Create a table in Google or Excel and bring all the debts to it. Adhere to the following system: the name of the creditor, interest rate, total balance, loan term (if any), minimum payment. Include a loan for training, credit cards and other mandatory payments there.

3. Small debts

When you finish drawing up a statement, numb the lines in priority. This is critically necessary: you will get a clear idea of where to start and in what sequence to perform the planned steps.

How to prioritize?

Debt debt discord. It is very important to understand that there are different types of financial obligations.

1. Divide debts into bad and good

As a rule, bad debts are a reckoning for momentary impulses: we buy because we want, and not because we need. Although there are extraordinary circumstances when you can not do without a loan, but

basically it is excess expenses. There are three categories of bad debts:

  • Credit card debt;
  • car loans;
  • Consumer loans.

Good debts are investments in the future. They are also divided into three categories:

  • learning loans;
  • mortgage;
  • Business development loans.

2. Decide what debt to close first

I recommend ending with bad debts, whether it be a car loan or a credit card. Try to pay off the highest interest rate on loans as soon as possible. If there are several credit cards, close the one on which the largest percentage is removed. So you will save more money.

3. Pay in excess of the minimum

Minimum payments drive you into financial bondage, since the lion’s share of the contribution eat interest and commissions. Even an insignificant sum of a minimum will allow you to get out of money difficulty faster.