It is easy to accumulate a huge amount of debt in no time but extremely difficult eliminate your debts and get back the controls of your financial life.
Too much debt can be overwhelming and can make you desperate enough to take extreme steps.
Many debtors are tempted to file for bankruptcy even though they know the long term effects they will have to deal with.
This is not a time to panic but to methodically work your way out of this mess.
You have to remember that this will not happen overnight and will have to be patient.
1.
You can start by giving yourself a thorough financial analysis.
You will need to go through your credit report to know the current status of all your debts.
Make a list of all the debts and the interest rates being charged on them.
Now make a list of all the things on which you need to make mandatory expenses every month including groceries.
This list will give you your monthly expenditure.
Now make a list your incomes which should include any bonus or part time job salary that you might be earning.
2.
Once you have your statistics in place you need a payment plan? Without this plan in hand you will feel that you are investing all your money into paying back your debts but reaching nowhere.
Pay off the debts with the lowest balance first.
If more than one debt has the same balance then pay the one with the higher interest.
3.
Negotiate with the creditors to reduce the interest rates and try to get the penalty charges removed from your account.
This will bring down the total balance and the monthly payment.
4.
Take assistance of credit counsellor for negotiations as creditors take them more seriously.