The Path to Savings
Beyond Finance TeamPosted on Mar 26, 2018
Let’s face facts; knowing how to get out of debt can be tough. Many of us fell into debt in the first place because of problems with personal finance, the skyrocketing costs of college education, or the setbacks life hands you such as layoffs and medical problems. There are numerous situations where a credit card is sometimes the only option because your bank balance won’t cover the cost. But anybody can learn how to get out of debt with the right focus. Here are five steps you can try to get on the path to savings.
Step One: Don’t be a Sisyphus, Pay off Smaller Debts First.
There is a myth from Ancient Greece of the tragic Corinthian king, Sisyphus, who was condemned to an eternity of hard labor in the fiery depths of Hades. He was tasked with rolling a great boulder in endless struggle to the summit of a hill, only to have the rock roll back to the bottom as soon as his goal neared completion.
The fruitless toil of Sisyphus closely parallels the experience many people have when trying to successfully decide how to get out of debt. One reason so many people give up on their debt management plan is because they keep paying and paying and yet it feels like they’re getting nowhere. In essence they are trapped on a debt treadmill with no way of stopping. Instead of trying to tackle your cumulative debt balance head on, focus your money on smaller debts and get those paid off first. The sense of accomplishment from eliminating these balances will be the mental boost needed to take on larger debts, and it is also productive in rejuvenating your financial health.
Step Two: Set Debt Benchmarks.
Another way to get your finances on track is to set benchmarks for how to get out of debt. Instead of saying, “I’ll get all my debt paid in a year,” sit down, work out what makes sense to pay out of your budget, and pick a few goals at a time, like removing $1000 off your credit card, or paying off a student loan. Make smaller, more specific goals a part of your debt management plan and you’ll see the dividends pay off.
Step Three: Roll a “Debt Snowball.”
The debt snowball is a simple trick, but when used properly the debt snowball is a highly effective measure for reducing debt. Essentially, you make a budget and focus on overpaying one debt balance while making minimums on all the others. Once you pay off the first debt you focus the extra money you were paying on the next debt, and so on. It takes a little momentum to get rolling at first, but like a snowball bounding down a freshly powdered hill, you’ll be able to pay off debts faster and faster until all expenses are wiped out.
Step Four: Track how much Money You’re Spending.
It’s tough to imagine the money going out to credit card companies and other lenders until you actually sit down with a calculator and flesh out your finances. Part of the reason it’s so easy to get into debt is that many credit card companies make their money on you carrying a balance. If you’re only making minimum payments on your credit cards, most of that money is going to interest. It’s a tough pill to swallow once you realize how much of your monthly payment gets placed right in your credit card company’s “back pocket” as interest payments. Sometimes though, this is the necessary shock to the system to find the credit card help that you need.
Step Five: Budget for the Little Things.
One of the biggest problems for how to get out of debt is this notion that it means you have to live as modestly as humanly possible. But very few people can give up absolutely everything; after all, you may not be able to afford lavish vacations, but everyone needs to take the occasional personal day to refresh. Don’t make your debt management budget so rigid that you can’t occasionally meet some friends for a light lunch, or stop by your favorite coffee place every now and again. If you don’t take care of yourself, getting out of debt will feel impossible.
Nobody said the path to savings would be easy, but take it one step at a time and you will begin to notice progress. The toughest step can sometimes be realizing you need some credit card help.
For something as small and compact as a credit card, it can sometimes feel like a cannonball chained to your ankle. There is hope though.
Beyond Finance is here to assist you in becoming debt free. Let us be your guide on the path to savings. Call 1-800-495-4069 today for a free, no obligation consultation with one of our experienced Consultants. In as little as 10 minutes, we can tailor a program specific to your unique situation and help you to eliminate unsecured debts in as little as 1-3 years. Your debts aren’t going away anytime soon if you’re only making the minimum payments. In some cases, it can take 14-27 years to pay down a credit card balance. Don’t wait. Get help with your credit card debt. Call today.