Unfortunately, debt is all too common. American household debt hit nearly seventeen trillion at the end of 2022, with missed payments on the rise for virtually all debt types.
From gambling and addiction problems to rising medical costs, there are numerous reasons people can get into debt. The figures are clear that this is a serious problem not just in the US, but worldwide; the real question is, what can be done about it?
This is a complex issue with many components, but if you’re struggling, it can help to take a bird’s eye view and look at the big picture. In this article, you’ll discover how you can develop a strategy to overcome it in three simple steps!
1. Assessing Your Overall Financial Situation
If you find mounting debts to be consuming multiple aspects of your life, it’s important to start by ensuring you have a clear idea of where it’s stemming from. Make a simple list of all your debts – they could come in the form of loans, credit cards, mortgages, whatever: just get everything down on paper.
For each debt, gather the key data: the total amount owed, due dates, interest rates, and minimum monthly payments. Having organized all your debts in this way, you’ll be in a much better position to form a strategy to pay them off.
2. Key Strategies for Overcoming Debt
There are several strategies you can use to work toward overcoming a debt repayment problem.
First off, you have the Debt Snowball Method: this strategy works by starting with the smallest debts and working up to the bigger stuff. It’s easy to get overwhelmed if you try to work on it all at once, so building a hierarchy like this can make things much more manageable.
Then, there’s the Debt Avalanch Method: here, you take a look at the list you made in step one, and start with the debt that has the highest interest rate. This is the debt that’s ultimately going to cause the most stress, so the idea is that you get the worst over with first.
3. Reach Out for Help
One of the fundamental reasons people find it so difficult to overcome debt is because of psychological reasons – namely, guilt and shame.
If you can face your fears, however, you’ll find that there is a huge amount of help available if you reach out for it. For example, there are individuals like Alex Kleyner: he set up an organization called National Debt Relief, which exists to provide guidance and reassurance for people who are struggling. There are also some great personal finance videos on YouTube, and even approaching a close friend for support can be extremely valuable.
The important thing to know is that there’s always hope: although your situation might seem insurmountable right now, if you take the necessary steps to break it down bit by bit, you’ll learn that every problem has a viable solution. It’s not going to happen overnight, but rest assured – where there’s a will, there’s a way!