Step 1: The first step isn’t simple. But it is in concept. You need to put a line in the same and stop going further into debt. Cut up those cards, put them in a snaplock bag and freeze them or give them to (financially stable!!) mum til you feel secure without them – do whatever you need to.
Step 2: Consider finding ways to reduce the debts. This might be putting it on your mortgage if you have one, or very effectively moving it to a 0% interest rate (or 1-2% etc) credit card and continuing to move it until the debt is gone. Remember, at 20% on $10,000, you are paying $2000 a year in interest. That’s $40 a week. Find ways to reduce that.
Step 3: It’s the scary budget time. Don’t worry though! I have the easiest spreadsheet to do this with right here (you do need to sign up to my email list to access the printables/files). Make sure you have excel on your computer (I am working on having this set up for other programs too – but a friend should be able to let you use there excel in the meantime 🙂 ). Then, find ALL your expenses and incomes and make sure you put them into the spreadsheet. This helps you know how much bills are and how much you need weekly or need to “find” each week to live. Ideally, put the “bills” money in a bills account which all bills are in AND don’t touch any spare money in there – consider it sitting there for that bill! Here’s the link again.
Step 4: If you aren’t up to date with your current bills, this is important for you. You need to find ways to cut your current budget or make some more money so you can stay current on your bills (phone, power, etc) as much as possible. This is stopping the debt and stress cycle.
Step 5: Work out your bills in order from smallest to largest. Then start paying them all on minimum payments and putting extra into the smallest. Once it’s paid off, you put the minimum payment on that one into the next one too until that’s paid off. This is called the “Snowball method” and is great for feeling more motivated about it. Graphs, printable thermometers, boxes for every $10 paid on a piece of paper and thing like this can all help the motivation in the daily slowness of it.
Let’s do this! Join me at www.facebook.com/nipendalove to see more advice and chat about savings debt and some transformation stories! It’s not an easy ride to get out of debt, but together we can do it.