How to Stay Financially Afloat When You’re Drowning in Debt

Are you drowning in debt? We’ve all been there. You’ve spent too much on your credit cards and a few months down the line everything feels out of control. Maybe you’ve recently lost your job or a lot of big unexpected purchases have forced you to spend more money then you thought you were going and you can’t pay back your debts.

But don’t stress. Getting out of debt is money 101. Here’s what you need to get some help.

1. Budget Well

First of all, ensure that you have a budget. This might sound obvious but if you don’t make a plan of how much you spend each month and have a deep understanding or your spending habits, how can you ever hope to pay back your debts?

These days keeping track of your spending isn’t hard. Digital banking apps like Revolut and Monzo, which have recently launched in the U.S, have budgeting tools built into them so you can see spreadsheets and piecharts which reveal how much you spent on groceries, food and other amenities.

Once you have a grasp of what you spend your money you can start to think of ways that you can cut down your expenditure. If for instance, you find you are spending more than $30 a month on subscriptions to services like Netflix, Amazon Prime and Audible you might want to ditch some of those and put that money straight into paying off your debts.

Once you have an understanding of your weekly or monthly budget you can start to formulate plans for paying off your debts. You can see what is a reasonable amount to pay off and how long it will take you.

2. Stop Spending on Your Credit Card

The average American is $38,000 in debt. This is mainly because credit cards are Americans’ best friends. From air miles to cashback there are so many perks to them that it’s inevitable you will have accrued a few over the years. But you need to stop spending on them as they can lead to impulse purchases and the ever-snowballing cycle of debt.

Remember the interest rates on credit cards are higher than on pre-arranged loans and they are meant for short term loans or for getting in the rewards, not for long terms lending.

The rule is usually to only spend on your credit cards what you have in your checking account at any one time and to pay them back straight away. However, you might find it hard to stick to this.

Cancel or Hide Those Cards

Instead, consider canceling your cards but if you can’t bring yourself to do this and feel that you might need a credit card in an emergency be sure to take them out of your wallet and place them in a draw in your house or a safe place. Also, be sure to remove them from your mobile wallet such as Apple Pay on your phone. This way you have to actually think about going to your bedroom to get your credit cards and can’t just use them to make impulse purchases.

After you have paid back your current loans you will need to repair your credit score. Be sure to read The Complete Guide to Credit Repair to make this a reality.

3. Block Amazon On Your Laptop

Who doesn’t love online shopping? Amazon even has a one-click shopping feature you can activate. You might fantasize about having everything you ever wanted. However, this kind of impulse purchasing is simply not helpful to you. This is not how to get out of debt.

Consider blocking Amazon or your other favorite shops on your computer to ensure that you don’t go mindlessly scrolling for items that you don’t need.

4. Downgrade And Live Within Your Means

Sometimes in life, you have to think about what is important to you and being in a perpetual state of debt is not a great way to live. You might want to think about downgrading your house or your car so that you can pay back some of your debts in a lump sum and can start to live a more frugal life that makes you happy. Changing your mindset is how to get out of debt.

There is a stigma attached to downsizing as we live in a very materialistic society where it can feel important to have the latest things but true friends will understand and won’t judge you for your decisions.

You can use online real estate services to help you sell your home quickly if you decide this is what you want to do. You could investigate whether there are public transport alternatives to your daily commute from your home to see whether you could still get around if you sold your car. Start by selling off smaller items like expensive televisions or downgrading your cell phone contracts or television packages.

Money 101 Is Living Within Your Means

The key to getting out of debt is to live within your means. Avoid spending on a credit card as this can lead to impulse spending. Instead, leave your cards at home and remove them from your mobile wallet. If you find you have to many subscriptions to services like Netflix or Amazon Prime, cancel them or chose one that you like.

Avoid the need for fancy and expensive televisions and furniture fittings. Downgrade these if you can and pay the money you save on paying back your debt. You could even consider selling up entirely and moving to a smaller place if your debt is substantial. You could always buy a bigger place once you are in a more stable financial position and can afford it.

If you are interested in reading more about how to get out of debt and money 101 then be sure to check out the rest of our site.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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