It’s important to take action when you have debt. Today I want to discuss 4 specific actions to take when you are in debt.
1) Be Aware of how much Debt you Have
Believe it or not many people are not aware exactly how much debt they’re in. Many simply make payments as they are required and never take a closer look at their debt. This is especially true for people who have student loans and consumer debt.
One action step you should absolutely take if you are in debt is to list out all your debt. Include how much the debt is, how much the monthly payment is, what company owns the debt, and finally what the interest rate is on your debt.
You should consider attacking high-interest debt first and worry less about low interest rate debt (6.5% or lower). High interest debt can be much costlier than low interest debt, so it might make sense to consolidate high interest debt or negotiate with the lender for a lower rate.
2) Automate Payments
Another action step you should take when you are in debt is to automate payments. This step should be taken after you list out the details of your debt, because once debt is on auto-pay you will likely have less motivation to take a deep-dive look at your debt.
The value in automating payments is from the “set it and forget it” mentality that comes with it. If you consistently make payments towards debt, you know that each month you are one step closer to your ultimate goal of being debt-free.
3) Find Ways to Increase Income
One thing I think most people fail to do is leverage their debt for motivation. Debt can be incredibly motivating and in many cases will push people to do things that they otherwise would not. I suggest using this motivation to find a way to increase your income.
Income can increase from getting a raise at a full-time job or creating a business or “side hustle” that is done in your spare time. For example, many writers and bloggers did not (and do not) work on their websites and writing full-time. Instead they spend they utilize their spare time to write and blog. This can lead to a new stream of income that can offset – or even exceed – your monthly debt payments.
4) Get Help if you’re Feeling Overwhelmed
The final action step I recommend is an important one: get help if you’re feeling overwhelmed. There are a number of companies and organizations, such as GreenPath that offer debt counseling, and I would highly recommend checking it out if you feel like you are constantly struggling with balancing your debt payments and other bills/priorities.