It’s that time of year for tackling resolutions, and one of the most popular ones is getting out of debt and taking control of personal finances. If you have vowed to get your budget under control, but don’t know how to get started, there are actually a few simple steps you can take to get yourself on track toward your goal.
First of all, obtain a free credit report and go over it with a fine-toothed comb. If anything seems amiss, file a statement with all three major credit bureaus to show that you believe the report is erroneous. If the credit bureau cannot get an answer from that creditor, it will be taken off your credit record. If there is a dispute, you will have the opportunity to fight it and get it off your report. Whatever you do, don’t just leave negative reports on your record. These impact your credit score, which in turn impacts pretty much everything else in your financial life.
Another step is to consolidate debt. Call student loan lenders and be very honest about your situation. There have been new programs put into place by Congress, to help reduce the student loan debt burden many people are carrying. The problem is that many consumers don’t know about them. Calling the banks who manage your student loans is the first step to getting reduced payments. If your financial situation has changed drastically, you may not even be required to make payments at this time. Then you can put that money toward paying own other debts.
The next step is to get rid of all but one credit card, which should be used in absolute emergencies only. Cut up the others so that you aren’t even tempted to use them again. Now that you have removed temptation to overspend, look into consolidating credit card debt into one low monthly payment. Pay as much as you can on this every month, and you can steadily dig yourself out of debt.
Finally, make sure you have a realistic monthly budget and stick to it. Try to see it as a temporary sacrifice, so that you can enjoy better financial security in the future. The hardest part is getting through the first few months. Once you begin to see an improvement in your financial situation, you will feel more and more motivated to stick with your plans.
