If you’re buried in debt, the new year is the perfect time to start digging yourself out!
First: stop charging! Admit to yourself that if you can’t afford to pay cash for something, you can’t afford it. The next step is having a realistic budget. You need to know what your living expenses are and how much you can put toward your debt with each paycheck.
Next, take your total amount of debt and figure out how long it will take you to pay it off, plus the interest accrued. If the amount of time it will take you to pay it off seems unreasonably long, you’ll need to cut some unnecessary expenses or get a second job. In addition, try to negotiate a lower rate with your creditors or look into a debt consolidation loan.
Finally, create a short-term debt reduction plan. Determine how much you’ll be able to have paid off every three months and pat yourself on the back as you reach each milestone.