You’ve heard the saying, “if you are in a hole, stop digging.” This is particularly good advice when it comes to debt. If you find yourself in the red, the first order of business is to stop the behaviors that got you there in the first place. But, how do you do this? Digging yourself out of the hole can be a daunting task, especially if you are on a tight budget. When you’re ready to tackle your debt, here are five tips to get you started:
1. Know what you owe. Take inventory of your debt. Many people resist this process because it can be scary, but you need to tally up what you owe and make a cash flow calendar. Use this calendar to track what’s going in and coming out of your accounts each month.
2. Make a realistic plan – and make it automatic. Organize your debts in order of priority and figure out the amount you can afford to pay toward each debt every month. You can even set up automatic payments through Uwharrie online banking to help stay on track with your payment plan.
3. Cut expenses. Take a hard look at your monthly budget and determine where you can lower expenses to make more funds available to pay down debt. Look for ways to save on monthly bills – such as lowering your monthly electric bill. You can also search for better deals on expenses like car insurance.
4. Lower your spending. You may have to make some difficult choices, but if you are in debt there is a reason for it – and it may come back to poor spending choices in the past. After you cut expenses as much as you can, you need to look at ways to lower your spending as well.
5. Get support. Find someone you can trust to talk about your financial situation. Pick someone who has his or her financial life in order, and who will respect your privacy. And don’t forget, you can always talk to a Uwharrie banker for advice on managing your budget and reducing your debt.
Even if you have a limited budget, with patience and discipline, you can get out of debt and enjoy more freedom with your finances.