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Debt doesn’t become a problem until you can’t figure out a way to get out of it. Once we begin to take on more debt, most of us genuinely believe that we’ll be able to pay off what we owe when it’s due. Unfortunately, what we believe and what we actually can do are not always the same thing.

Not keeping track of purchases, losing a job, sickness in the family and natural disasters can all wreak havoc on our finances. Suddenly, the bills that we thought we’re perfectly capable of paying can seem insurmountable. In situations like these, the best way to get things under control is to stay calm, think clearly and formulate a plan to settle your bills without driving yourself to bankruptcy.

It won’t happen overnight, but debt relief is certainly attainable with a sound strategy and lots of willpower. You can do this on your own or you can seek the help of professionals who know the ins and outs of the credit industry. Whichever route you choose, there are principles in debt recovery that remain the same. Here are 10 that you need to double down on as you nurse your finances back to good standing:

  1. Do Some Accounting and be honest.

Make a list of how much you owe and to whom you owe it. Be brutally honest, down to the last cent – if you can’t be honest with yourself, it will only spell more trouble in the future.

List down all your fixed sources of income – don’t include freelance-type jobs that don’t have a set payment schedule and amount. List down every fixed expense such as your utilities and food allowance. These are non-negotiable and essential to basic life.

After creating each list, you will get a clearer picture of how much you still owe, how much you are able to pay and how to budget your current sources of income to accommodate your debt strategy. This will be instrumental in prioritizing the necessities over the luxuries.

  1. Create a budget plan.

A budget plan is necessary to get out of debt. Draw up a plan that includes your fixed income, fixed expenses, and balances due for all your debts. You should also include a schedule on when you should be making your payments.

Be realistic – don’t allocate too much for payments at the risk of not being able to sustain your basic needs just to get out of debt. While the goal is to trim the fat from your expenses, you can’t cut down on things that will affect your capability to sustain good health and maintain a steady income.

  1. Organize your bills.

It will be easier to create a budget plan if your bills are all in order. When you have a good idea of how much you’ll be paying for your utilities, you can plan ahead and schedule payments. This also allows you to estimate your allocations for other expenses.

You can also consider paying your utility bills through direct debit. It will be easier to manage because you don’t have to worry about paying on time and incurring additional costs from penalties. Check if your provider offers a discount for payments made through direct debit – this is another way of saving up funds to help clear your balances.

  1. Practice restraint.

Self-discipline is a critical factor in getting out of debt. If you have the habit of visiting the store every weekend to buy new clothes, you may want to rethink this habit and adjust. Better yet, develop a new one – try going for a walk in the park instead and get some exercise. You can also use the spare time to earn extra cash from part-time work.

If something is on sale in the store and you’re tempted to make a purchase, make a careful, honest evaluation of your financial status and state of need. Do you need a fancy new TV? Can it wait? Stop, think, and drive away that impulse to buy. Most especially, never ever dip into your fixed expenses funds to cater to a whim.

  1. Pay in cash if you can.

Avoid using your credit cards as much as possible, especially those small purchases that can drive up your bill through interest. Until you’ve paid off your debt, use cash as much as you can. Studies have shown that people tend to make impulse purchases less when they need to pull out hard money from their pockets. Paying in cash is also a powerful reminder that your money is precious, limited and must be used wisely.

If there is absolutely something you have to use a card for, shop around for the best deals first. The market for most goods is highly competitive, and you’re sure to find interest-free offers or cheaper alternatives if you’re wise and patient enough.

  1. Take advantage of store brands.

For supplies like Q-tips, toilet paper, and dish soap, you may find that low-cost store brands have comparable quality levels to more expensive retail brands. The money you save can then be allocated to loan repayments. While this may not seem like much at first, these savings add up over the months and accelerate your ascent out of the debt hole.

  1. Manage or switch your service providers.

Does your cellular service give you the best value for money? Are you able to watch all the channels that your cable TV plan gives you? Evaluate all your service providers and make switches or downgrade accordingly.

Switching, in particular, might help you save on costs, as there are a lot of offers and packages for new clients that you can take advantage of. Once you’ve decided replace providers, ensure that you get only the specific services that you need. You can also enroll these accounts to direct debit payment for easier management of your finances.

  1. Small cutbacks.

If you’re the type to go out for dinner every week, try to cut it back to once a month. You don’t have to completely eliminate your little luxuries, as this might be a little too disheartening to some people. Just limit it to the bare minimum.

  1. Set up an emergency fund.

If you don’t already have one, set up an account for emergency situations. This is an important step in paying off your debts if unexpected expenses come up.

You can aim for at least a $1,000 for an initial amount and grow it later on. This comes in handy for hospital bills, emergency maintenance for your home and other random but hefty expenses.

Getting out of debt and gaining control of your finances are little triumphs in life – remember to celebrate this milestone even in a simple way. Give yourself a little reward for continued motivation on being more financially responsible.

Debt Relief programs eliminate your debt in the best possible way. At CreditAssociates we have a special team of experts to help you break the debt cycle and provide you the tools and knowledge to secure your financial future.