How to Deal With Long Term Debt

Having debt can be extremely frustrating and feel like something you are enslaved to. Unfortunately being in some amount of debt has become commonplace. With the costs of everyday life, the uncertainties of the economy and the incessant advertisers pressuring us to constantly buy more, bigger and better items, it is no wonder that so many of us are behind the eight ball. If you are in debt, even long-term debt, there is hope for you. With a certain degree of planning, diligence and discipline you can be on your way to lowering and potentially eliminating your debt.

Instructions

How to Deal With Long-Term Debt

1

Determine exactly how much debt you are in. Nobody likes to be in debt but neither stressing over it nor ignoring it because it is too overwhelming is going to help improve your circumstances. Knowing exactly how much you owe is the first step to reducing it. Look at all your bills including loans, credit cards, mortgage and any other amount you owe and determine the total.

2

Create a budget. Type a list of all your current bills and your recurring monthly payments. Also take into consideration the amount you spend on gas, groceries, toiletries and other essentials. Add up the total amount you spend each month and subtract it from your monthly income. The amount you have left is your surplus.

3

Reduce your surplus spending. If you currently use your surplus on shopping sprees, entertainment and going out to dinner, try to cut back on those items. Decide on a maximum amount you want to spend out of your surplus each month and stick to it.

4

Set up a debt repayment plan using the rest of your surplus income. You should continue to make the minimum payments on all of your debts, and you will use this plan to begin to reduce your debts one by one. Categorize your debts by the amount of interest you owe on each item. Do not include your mortgage here. You will want to use the rest of your surplus income to start paying extra money against the principal amount you owe on your debts beginning with your highest interest rate debt, which will likely be your credit card. Once you pay off one debt completely, move onto the next highest interest rate debt and so on. Resolve to not add any more debt.

5

Consider acquiring a secondary income through a second job if you do not have enough of a surplus to make a dent in your debts. If you have been living beyond your means, you may need to make more money to get out of debt. This will be a sacrifice, but it is necessary in order to become free of debt and will be well worth it in the long run.

6

Pay extra against the principal of your mortgage once your other debts have been eliminated. This will enable you to pay off your mortgage in a shorter time period, thus reducing the overall amount you end up paying for your home.

7

Do not neglect your savings account. No matter how badly you want to get out of debt, you should still want add money into your savings account each month. Even if you only put 5 percent of your income away, you will certainly want a cushion in case the unexpected occurs. Include your monthly allocation to your savings account in your budget.