Financial Education

How to get out of debt: a 101 guide

This is a step-by-step guide on getting rid of all your debts in the fastest and most painless way possible. Keep reading to learn more!

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Take control of your finances starting today!

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Learn how to get out of debt today! Source: Adobe Stock

Debt. It’s a word that can make even the strongest person feel weak. Whether it’s small or large, it’s hard to manage! But don’t give up! Today you’ll learn how to get out of debt!

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In this blog post, we will share some tips to help you take control of your finances. Keep reading to learn everything you need to know about getting rid of your debt for good.

5 easy steps to get out of debt

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Get out of debt with these tips and achieve healthier finances! Source: Adobe Stock

Being financially secure is something we will strive for. But it can seem impossible when you’re sinking deeper into consumer debt.

There are some debts you cannot avoid – even if you try – like mortgages or loans. On the other hand, we have some extremely avoidable debts that can cause headaches.

I know sometimes it is difficult to organize our finances, especially when we lack knowledge or assistance. The good news is that we are here to help you!

With a bit of effort and the right advice, you can start planning the best ways to get out of debt and stay away from it for good!

That’s why we have the best 5 tips to teach you how to get out of debt and achieve healthier finances. Then let’s get started with your debt-free journey!

Make a list of everything you owe

To get started the right way, you first need to know exactly how much you owe. So start by making a list of all your debt.

Consider any mortgage, car, student, personal, and other possible types of loans you might have. It would be best if you took notes of your monthly payments and interest rates.

Regarding credit cards, consider the minimum monthly payment and interest rate. This way, you can predict the minimum amount you owe monthly.

Knowing how much you must pay monthly will help you organize your budget and plan according to your income and other expenses.

Organize your budget

One of the main secrets to getting out of debt is making the most of every dollar. You can start by setting a realistic budget!

One of the most common ones is the 50/30/20 budget. In this budgeting model, you’ll divide your income into three parts!

Consequently, 50% of it is destined for your essential expenses. 30% of your income is for wants. As lastly, 20% goes for savings and debt pay-down.

When you set a budget, you can start tracking your progress e set realistic financial goals.

Try to pay more than the minimum payment

Stressed young woman checking bills, taxes, bank account balance and calculating expenses in the living room at home
5 best tips on how to get out of debt! Source: Adobe Stock

Pay more than the minimum if you want to get off debt faster. However, you first need to consider your budget and decide how much extra you can put toward the debt.

By paying more than the minimum, you’ll be reducing the principal balance of your credit cards faster.

You can set the extra payment before the due date in your billing cycle. You can also add it to the monthly minimum payments.

Refinance your debt

Financial products involving credit might often charge high-interest rates. And let’s be honest; interest will make your debt grow faster!

Therefore, refinancing your debt can be a way to save money on it.

By negotiating interest rates on mortgages, personal, student, and other types of loans, it is possible to consolidate this debt faster. But how?

Well, it is simple! When you refinance your interest rates, you can easily predict your monthly payments and set a loan term. As previously said, it will make you pay off this debt sooner.

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Stick with your financial plan

It’s easy to get carried away while working on paying off your debt. But don’t forget about the importance of not taking any new debts.

Once you’ve organized your budget and set a strategy to pay it off, it is fundamental to follow your plans and stick to your budget.

For example, avoid taking any new personal loan or using a balance transfer card to consolidate a credit card debt.

If you want to succeed, be diligent as you move forward. This way, you won’t let your debts turn into a snowball.

Bottom line

Congratulations! You’ve made it through our guide on how to get out of debt! Now it’s time to take control of your finances and implement these plans!

These are just a few tips to help you start your journey.

But you can also use other great tricks, such as getting a part-time job, selling your car, cutting up your credit card, and asking for a raise.

I know it might seem a little intense, but sometimes it is necessary to take more serious measures to achieve your objectives.

There is no one-size-fits-all solution, so find the best plan and stick with it! Don’t be afraid to ask for help – plenty of people want to see you succeed.

Then take control of your finances and start building a brighter future today!

We have a great article to help you with your healthier finances journey! Read the following post and learn the five best tips for starting budgeting and making the most of your money!

person using a laptop with graphics on the screen

How to start budgeting: 5 best tips

Are you struggling to make the most of your money? This article will guide you on how to start budgeting and create a good financial plan for your future. Let’s go!

About the author  /  Beatriz Vieira

Beatriz Vieira is a producer and copywriter who is part of the finance writer team in this portal. She has a degree in Journalism and aims to improve her bilingual writing skills. Her subjects of most significant interest are culture, finances, and self-development.

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