OK, you are in your 20’s and just starting off in the so called real world. It’s hard, we get it. It’s also crazy expensive to live on your own! I’ve been on my own for over two years now and there are times where I still feel like I haven’t gotten the hang of it. One of the reason’s why it was so hard for me to keep up with my bills was because I was already in debt. My student loans were getting the best of me. I needed a quick fix for my student loan debt. It may seem like an impossible task, sort of like nailing Jell-O to a wall, but I can assure you young grasshopper, that is actually pretty easy. I have come up with a list of ways to help you get back on your feet and managing your debt in no time!
1. Stop Harrowing: In order to hit a debt-free home run, you must be able to make it to first base, (yeah I used a baseball reference.) What this means is stop making the problem worse. For example, if you’re already $7,000 deep in credit card debt, you probably shouldn’t go and apply for another credit card. It can be daunting, yes. I still tear up a bit every time the cashier at Victoria Secret’s asks me to apply for a credit card. The first thing you should do is figure out what created your debt problem. That way you can find your debt solution. Some people may try to earn some more money to help pay down their debts. Others, like myself, need to start tracking their spending and cut back. Whatever the case may be, you’re in debt because your income/spending ratio is totally out of whack. Pretty simple stuff right?
2. Refinance: OK—so now that you have finally dug yourself out of that sizable trench, it’s time to throw out the debt. Grab a pen and paper and make a list of all your debt. Make sure to include the amount, payments you are making, and of course the ever so lovely interest rate. Don’t forget that when you make your payments, most of the money goes toward interest and the remainder goes toward principal debt. If the cause of your problem is in the past, that’s actually a good thing. You are ahead in the game. But the bottom line is that you really shouldn’t do anything until you completely understand why you are in the position you’re in. Also, do not be afraid to ask people for help. If there is something you do not understand then speak up. The last thing you want is to attempt fixing a problem without fully understanding the situation. It may end up causing you money, more time, and your sanity. You will create something magical when you reduce the interest rate on your debt. This means that more of your payment will go towards reducing the principal which will have you debt free much faster. Refinancing debt can be a bit of a process. DO NOT PANIC! The first thing you can do is try to get your lenders to reduce the rate they are charging you. It’s not always successful, but it is definitely worth a shot. Once you have done that, try to get your family to refinance your debt. If this is what you decide to do, you have to approach them with both guns blazing. You’ll need a solid payment and you have to know exactly what you are talking about. If your family decides to help, make sure you stick with the plan. The last thing you want is any family drama. Thanksgiving is already awkward enough.
3. Add it up: This is typically not anyone’s favorite subject, but now it is time to do the math. At this point, you have done all you can to slash your cost of debt. Please take note that all this work has not cost you a dollar or really involved any hard labor. Unless of course you are like me and math isn’t your forte. You my friend are on your way to simply rearranging your debt and making it more manageable. Now we are on to the fun part! It is time to put on your glove, step into the ring, and really beat down your debt. One more final suggestion is to make minimum payments on all your debts. However, be sure to exclude the ones with the highest interest rate. The sooner those are knocked off your credit report, the better. Trust me on toward the next highest cost debt. You need to continue this process until you are completely debt free. It may seem like a long painful road, but it is so worth it in the end. Being in debt equals horrible credit. And horrible credit means not being able to get that new car you want or buying that beautiful first home. You can and you will make this happen! A positive mindset helps. Just know that you are doing this now so you can have a better future later!