Debt can be a tricky thing. You might start out ignoring a student loan payment or your credit card bill, but before you know it, you may have racked up quite a bit of debt! If you are looking to make positive changes in your life, a financial change may be on your list of goals. On this page, I will provide some tips on how to get out of debt so that you can become financially independent and get the most out of your life! If you are interested in a fresh start, also consider that a Connecticut pardon could help you achieve this. If a past conviction is holding you back, a pardon could give you the fresh start that you deserve!
Step One: Determine Your Debt
It is important that you get a clear picture of all of your debt so that you can establish a plan of attack and start paying down the debt. While looking at all of your debt at once can be overwhelming, it is important to understand what you owe so that you can take control of it.
Make a list of any debt that you have, including:
- Credit car debt.
- Car loans.
- Student loans.
- Personal loans.
- Medical debt.
While a mortgage constitutes a big debt, many people do not consider this to be debt that needs to be paid off right away. Interest rates tend to be lower for mortgages than for other types of loans and are meant to be paid off over a long period of time. However, you can include any other type of debt in your estimate.
Once you know what you owe for each kind of debt that you have, you should list the interest rate for each loan/debt. You can list all of this information in a google doc, excel spreadsheet, or use an online calculator – there are many free options that you can take advantage of. Once you have this information, you can determine how to pay off your debt. You could work on paying off your largest debt first, the debt with the highest interest rate, or the smallest debt. All of these strategies have pros and cons and could work depending on your situation. You should consider which one you would find the most personally motivating. Will it help you stay motivated if you pay off the smallest debts first so that you can frequently check off forms of debt? Or will it feel more rewarding to pay the biggest debt first so that you can get it out of the way? Consider what will work best for you.
Step Two: Determine Your Income and Cost of Living
Once you know what debt you have and how you want to pay it off, you need to determine how much money you can put towards the debt each month. Determine your income as well as what you spend each month. Keep track of any and all money that you spend every month and determine what is necessary for you to spend, and what you can cut back on. You can again do this through an excel spreadsheet, pen and paper, or an online program or app.
Necessary expenses might include money for things like:
- Rent or mortgage payment.
- Utility bills.
- Money for groceries.
- Gas money so that you can get to and from work.
- Cell phone bill.
- Money for medications.
- Money you spend on necessities for your dependants.
Anything that is an absolute necessity should go into this category. Subtract your necessary expenses from your income. The number you are left with is leftover money that could go towards your debt.
Step Three: Establish a Budget
Any money that you spend that is not on a necessity could be cut out so that you can tighten your budget and put more money towards your debt each month. Here, you need to determine what will work in your life and what you can afford to cut out. Reconsider unnecessary expenses such as eating out, buying clothes, ordering from coffee shops, etc. You don’t have to give up everything, but the more you give up, the more you can put towards debt and pay it off faster.
Once you determine your budget, stick to it! I know it can be hard, but you will get used to your new routine once you get started. A short term sacrifice will ultimately lead to lasting financial freedom and it is worth it!
Next Steps
These are the first steps that you can take to get yourself out of debt. On another page, I will talk about how to save money once your debt is paid off. But making sure that you don’t have debt is a great place to start in achieving financial freedom. If you need help with your fresh start, or if you are also interested in applying for a pardon, contact my office. Making the effort to better your life financially can improve your pardon application. My staff is waiting to help you!
