You are in debt? Here’s what you can do

If you are in debt, there are many ways to get out of the pit. It may not be easy, but you will get there if you keep striving to get out of debt. The struggle may be real, but you don’t need to despair because there will always be a way out.

What to do when you are in debt

You are struggling to make ends meet means you need to do something about your current financial situation. It may take years to repay your existing debt, and even the consequences of having a negative credit rating will haunt you for years to come, but now is the best time to do something about it. Here’s how:

1. Acknowledge the fact that you are in debt. Stop running away from reality and face your situation head-on. Your debt will not be paid by forgetting about it. If you are always short on cash, you need to list where your money is going so that you can identify the purchases that are wreaking havoc on your finances and stop doing them immediately.
2. Create a realistic repayment plan. At this stage, one of the most important things to do is to list down all the debts you have accumulated – credit card, mortgage, student loans, and debts from family and friends. Include the principal and interest rate.
3. Categorize your debt and prioritize. Some financial experts say that you should pay your debts according to the amount – most minor to most significant in terms of amount or highest to the lowest in terms of interest rate. Usually, credit cards are the highest when it comes to interest rates, so you might want to consider paying that off first.

The most important thing to do now is to start somewhere. Make a list and stick to your repayment plan. Don’t add new debts while you are repaying, and try to come up with alternative sources of income. Whatever your decision may be, humbly admitting that you are in debt and coming up with a doable payment scheme is the way to go.