Debt is sometimes necessary, but it can get out of hand. If you’re finding it hard to pay your bills on time or have little flexibility in your budget, it’s time to start being proactive about paying off those debts.
How can you decide on the way to pay down what you owe? Here are three tips that can help you become better informed and prepared to tackle your debt.
- Put together your budget
The first thing you can do to be proactive about paying off your debt is to write your budget out. Be honest with yourself when you write this budget. Include things like monthly subscriptions that pay for apps or extras that you would normally buy.
Once you have this budget, go through the list and see how much you can cut down on spending. Cut out unnecessary expenses, like cable television if you have a smart TV, to see if you can make room in your finances to pay down your debts.
- Write out a timeline for paying off your debt
Next, it’s time to be realistic about how long it would take you to pay off your debt. To do this, list all of your debts and the payments each month. Write down the date you’ll pay off the debt if you only pay the minimum owed. Now, with the budget in mind, if there is any additional money to put down on a debt, adjust the end date. This will give you a good idea of how much debt you’re in, how long it will take you to pay it off with your current budget and how long it will take if you cut down on other expenditures.
- Know when you need additional help
For some people, cutting back on extras for a few months could be enough to get back in control of debt. For others, no amount of cutting back will be enough. If debts are overwhelming you and you’re falling behind, it may be time to look into legal options like bankruptcy.
These are three tips to help you be proactive in addressing your debt. Understanding what you owe, how long it could take to pay it and if you can afford it will help you make the right decision about how to eliminate your debt.