Seven First Steps to Take to Start Your Journey Out of Debt 

It will take time to get out of debt. But with the right know-how, you have the opportunity to eventually free yourself of your debts completely.

Here are seven steps you should take.

1. Work Out How Much You Owe

The first step you need to take is to list all of your different debts. Once you know precisely how much you owe in total, it will be easier to tackle getting out of debt.

Begin by listing all of your debt accounts and the amount you owe for each one. That could include credit card debt, personal loan debt, auto loan debt, and student debt, to name just a few.

Then, next to each debt on your list, write down the interest rate, the minimum amount you have to pay each month, and the due date. Finally, calculate the total minimum monthly amount you need to pay for all of your debt accounts.

2. Plan a Repayment Strategy

With a strategy in place, it will be much easier to tackle your debt, keep a clear head, and begin paying off more of your debts. You could target the debts with the highest interest rates first, as that will save you money in the long run and you could get out of debt quicker.

But you may prefer to pay your smallest debts off first so that you can eliminate certain debts completely. By doing that, you could be more motivated because you will know it is possible to eliminate your debt.

3. Consolidate Your Debts

It could make sense to consolidate your debts into one loan to make the repayments easier and more straightforward. By consolidating your debts, you can minimize the interest and pay off the amounts more quickly.

4. Reduce Your Expenses and Increase Your Payments

You will be able to pay off your debts faster if you are able to increase the repayment amounts you pay each month. By paying off more than the minimum requirements, you can also reduce the interest you need to pay so that you have less to pay overall.

One of the simplest ways to increase your payments is to reduce your outgoings. Make a list of all your essential payments, such as mortgage costs, utility costs, transportation costs, and grocery costs to find out how much you have left over each month.

Then, look at spending much of that surplus money on paying off your debt instead of paying for nonessentials.

For instance, you could stop buying coffee out and instead make a flask of coffee, always cook at home rather than eating out, and purchase second-hand clothing instead of buying new clothes.

It will be more than worth making small sacrifices to your lifestyle if it means you can climb out of your debt situation more quickly.

5. Try Debt Sentiment

Debt sentiment involves negotiating with your lenders. You would agree to pay off a portion of your debt in exchange for a reduced debt amount.

This option may not be viable, depending on your specific circumstances. But if you are in a position where you can pay off a portion of your debt with a lender, you could get on top of your remaining debt sooner than you think.

6. Find Out About Your Potential Options for Specific Types of Debt

When it comes to specific types of debt, you may have other options available. For instance, if you have multiple student loans, you may be able to refinance your loans into one payment that has a lower interest rate.

You could even qualify for student loan forgiveness programs if you have a federal student loan. Tools like Sofi’s student loan payoff calculator, debt navigator, and savings calculator can also help you manage your student debt.

You may have various options for paying off real estate debt, too.

For instance, you may be able to refinance your mortgage to get a lower percentage rate or make additional payments towards the principal on your mortgage loan, which would reduce the length of the loan and lower the cost of your interest.

7. Consult a Financial Advisor

Lastly, it could be worth consulting a professional financial advisor. You can then fully understand all of your options and be guided through the best strategies for getting out of your specific debt situation.