Getting in debt is one of the stressful situations in one’s life. This has a direct influence on person’s mental and spiritual state. There even happen cases when people commit suicide because of having deeply stuck on debts. In order to avoid such psychological depression and live in tranquility you should try to always estimate your income and expenses.
But is it possible to absolutely escape debts? If we take the life globally we can agree that there will be at least one period when our expenses surpass our income. Now let’s try to analyze what we should to once we appear in such a difficult situation.
1. Write down your expenses
One of your key to getting out of debt is writing down your spending. Some people refer to this as useless however you should note that the basis of your getting in debt is not the exact estimation of your income and expenditure.
You appear in debt as you have spent money you didn’t have. The best way to avoid more debts is to really acknowledge on what purpose you spend your money.
Write down each penny you spend on a day. Nevertheless, if you are unwilling to write down all your expenditures, you can just take note of those ones that you try to cut back. This will help you understand and work out what you can afford to repay.
Try to compare your spending budget of the last month to the one you schedule for the next month. Just write your spending down as it will help you decide what to cut down. Your honesty and strength to accept the reality are the most important factors to help you overcome the hard period.
2. Classify your spending
Among our expenditures we can find the ones that are necessary and those that we would like to have. So you had better classify your expenses in the corresponding groups. In the first group mention those expenses you must have and in the second group the ones you would like to have.
The first group will form those things which are of primary importance for you. Those are food, rent, medicine, etc. The second group includes things that you need, and which would enhance your life; however these are not the things without which it would be impossible live. These can be having a nice time with friends in some entertaining place, buying new clothes or phone, etc.
Do not get in panic and think that you have to eliminate all your desired things. This is not absolutely so. Just you should realize that one of your expenses should serve as a means of getting out of debt. Otherwise you will have to pay for your debts quite a long time.
3. Have a clear idea of your total debt
Another problem for not being able to get out of debt is not correctly estimating and having clear idea of your total debt. To overcome this you should figure out how much you owe, to whom, and on what terms.
Create a table and write down in each column the name of the creditor, your total balance, your minimum monthly payment, and your interest rate.
4. How to start your payment?
The sum of money that you cut back from your budget can be used for debt repayment. It’s really important to use the step 3 when starting to pay the debt as you should firstly pay to those creditors who hang out on your door step demanding their lending money, as well as give importance to the debts with exceedingly high interest rates.
5. Don’t give up.
Remember that you didn’t get into debt in a day, and naturally you can’t get out of it in a day. Do not concentrate on time trying to solve all the problems within a day. Instead manage your money and bring peace into your life. Just stop borrowing any more money at least until you have repaid your debts.