Many people have the habit of spending more than what they earn. Some don’t even want to admit it, which results in piles of debt. In 2016, almost 800,000 bankruptcy cases were recorded and filed in federal court. More than 11,000 of those were cases of bankruptcy in and around Salt Lake City.
Managing one’s finances is tough and needs tons of loads of discipline. Utah Bankruptcy Professionals shares the six steps you need to do to prevent yourself from drowning in debts.
Step 1. List down all the things you spend money on per month. That means everything from ice cream for your kids to insurance premium payments. If values vary, list it down as the highest amount you may pay in a month.
Step 2. List down all your debts from smallest to the largest amount.
Step 3. Free up some cash from your expense list in step 1. The real work starts here. Cancel subscriptions, i.e., gym memberships, which you are not using. Reduce your cable or even ask for discounts from your service providers. If that fails, ask for their retention department, and that will work wonders.
Step 4. Pay only the minimum required amount for all your debts, except for the one you want to pay off first.
Step 5. Now, pay that minimum required amount plus the money freed up from step 3 for debt number 1 on your list. Automating your payments is key to sticking to this debt pay-off plan. Adjust automation as you move down your list.
Step 6. Once you’ve paid off your debt number 1, add the amount that was being used per month to pay that to pay debt number 2. Minimum from debt number 1 plus minimum from debt number 2 plus freed up cash go to debt number 2 payment.
Repeat this cycle until you are down to the last debt on your list. Don’t add any other debt to your list, and remember to automate your payments. With patience and discipline, you’ll be debt free in no time.