A significant majority of people who are in debt have made at least one attempt to pay off their debts. Unfortunately, most people who try to get out of debt end up getting deeper in debt.
So, why do all these people end up getting deeper and deeper in debt? The answer lies in the approach that they use to get out of debt. Those Who take on more debt in an attempt to get out of debt are only putting a patch on the problem. Debt consolidation loans may work for a short while, but the underlying habits that created to debt problem in the first place will work against them.
The answer lies in correcting the underlying habits that create the problem of debt. The easiest way to do this is by using a debt repayment plan that won’t allow you to indulge in those old habits.
What are the steps of the debt repayment plans that won’t allow you to indulge in self defeating habits?
The first step is to create a buffer between you and going into additional debt. When you’re stretched really thin financially, even a small financial emergency can make you go back to using debt. What do I mean by a buffer? I mean a small amount of savings, somewhere between $500 and $1,000, depending on your situation. It should be enough to fix your car if it breaks, pay the plumber if a pipe bursts, or pay the bills if your paycheck is late or too small.
The second step is to incur no new debt. That means no debt consolidation loans, no second mortgages, or any other kind of loan. People who take out second mortgages in an effort to pay off credit card debt are substituting a secured loan for an unsecured debt. The problem with that it is that if you can’t pay off your debt, you lose your house.
The third step is to make a plan for paying off your debts. The order in which you pay off your debts makes a huge difference. Do if wrong, and you’ll lose your motivation to pay off your debts. Do it right, and you’ll pay off your debts quickly while becoming more and more motivated to get out of debt.
The fourth step is to carry out your plan. The easiest way to do this is to automate your debt repayment plan. One way to accomplish this is to use an automatic bill payment service, such as the kind offered by most banks. Once set up, a bill payment service will keep you from incurring late fees. Most bill payment services are free, so this is almost a no brainer if you want to get out of debt.
The fifth step is to stick to your plan. Once you’ve developed a little bit of momentum, this should be easy. Once again, the right debt repayment plan makes a huge difference.
There you have it: You now know how to pay off debt even if you failed last time and every time before that. All it takes is the right approach.