You vs. Debt: How to Win the Battle

You’ve been trying your level best, but just can’t seem to stay ahead of your debt.  You’re meeting your debt obligations, but barely, and you feel like every financial move you make is not taking you in the direction that you’d like.

Don’t lose heart. There is always hope, and there is always help.

Start with a Plan

I’m a runner, and I always like to use a hill analogy when tackling an obstacle.  When running a race, you need to size the hill up, decide on your approach based on its size, and commit to running it, with your eyes on the horizon.

Much is the same in debt management. You need to come up with a tactical plan in the short term to get you up that debt hill, while keeping your eyes on the horizon to ultimately pull you over it.

Lay it all out on the Table

Part of making a successful financial plan is to have a completely accurate picture of what you own and what you owe. All of it.

Literally, lay out all of your debts on the table. It might seem overwhelming to do so, but honesty and acknowledgement of the situation – along with a commitment to see your plan through are the first steps towards success.

Once you fully understand what you owe (including how much, interest rates, carrying charges etc.) then you can tailor a payment plan.

Parts Make up the Whole

Understand that, while trying to improve your overall debt picture, you need to start with pieces of your debt picture.

Start with your highest interest bearing debt (often store credit cards). Commit to minimum payments on other cards, so as to keep your credit in good standing, but commit also to erasing one debt at a time.

Set up a plan to put a set amount every month on one debt at a time, with an assigned timeline. Working overtime, receive a bonus at work, or consider some part-time casual employment to boost your income? Slap down those extra earnings on that debt. Get cash gifts for your birthday, holiday etc.? Same thing. Expect a tax refund in the spring? Same idea.

This is a year-round commitment that carries through all of the seasons. In time, the debt in question will be erased- and then it is on to the next.

 

 

Consolidate to Crush Debt

You may already have been trying this debt repayment tactic without success. Perhaps your income or job situation has changed, making your debt payment a challenge. Perhaps you are sick and tired of paying out huge interest payments, without eroding much capital on your debt, month after month.

Another shrewd financial move to correct your balance sheet is to consider debt consolidation.

You may be able to accommodate this on your own, if you have room on one credit card with a lower rate, which would allow you to consolidate all of your debts in one, lower-interest place.

A good idea too, is to approach your financial institution with all of your information in hand, and inquire about options to consolidate all of your debts into one installment loan. The benefit of an installment loan is that you will see it reduce, at a set rate and amount over time, as well as remove the multiple payments that are going mostly to interest.

Seek Help

You don’t have to endure this, or make plans alone. Align yourself with someone you trust, whether a friend, relative, financial advisor or credit counsellor. Debt repayment can be overwhelming, and success can hinge on having the support you need on your journey to reach your financial goals.