Being part of the 25+ million credit-active consumer group is NOT necessarily a bad thing. But, if you mismanage your various credit agreements, it can land you in some VERY hot water…

If you skipped a few payments lately and you have indeed strayed from a favourable financial path, how can you make sure you become debt free again?

Carla Oberholzer, debt adviser at DebtSafe says having credit obligations is indeed common but managing those commitments can become tough. Juggling is definitely not the preferred method of dealing with debt. If you don’t commit properly to paying your dues, it can add to serious financial stress or woes in your life.

Before you focus too much on the negative, there are certain vital steps you can incorporate in your ‘financial lifestyle’ to help get your financials on track again AND debt problems out of your way:

1.     Change your mentality, gain some willpower & turn a new ‘financial leaf’

Living your ‘used-to normal’ routine has been tough lately, for sure. Not to mention the financial challenges you probably had to put up with/and are still enduring.

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But, don’t you think it is time to turn a new ‘financial page’? You have to stand strong and put all the emotions aside so that you can change the way you think about your money situation.

Yes, you have had a few missteps when it comes to keeping up with payments, but now you have to tell yourself that you will deal with it as best you can.

  • Take a deep breath,
  • reflect on your situation,
  • be determined to succeed in your financial goal, and
  • think positive thoughts on how to accomplish the unthinkable – fixing your debt.

2.     Know what your financial situation is reflecting/indicating

How exactly can you know the true state of your financial situation? Well, the proof is in your credit score, budget, and bank statements.

How exactly can you know the true state of your financial situation? Well, the proof is in your credit score, budget, and bank statements.

  • Pull your report. Did you know that you can get a free credit report each year from any of the registered Credit Bureaus?
  • Take a good look at it together with your current budget outline and your latest bank statements.
  • Take out that highlighter or marker of yours and indicate that ‘concern-areas’.

When you see the whole picture of your financial reality, you can compile a plan to deal with it and change it for the better.

3.     Get all parties involved and the ‘unnecessary stuff’ out of your ‘financial way’

Okay so now you have an idea how bad your debt situation is and where the troubled, debt-filled areas are. The best thing would be to clear those areas by compiling an action plan for yourself.

Here is a list that you can work from/an example that you can use:

  • Cut out those spending leaks – don’t spend money on luxuries (regular salon/spa trips, latest tech gadgets or frequent/lavish travel destinations), or anything/item other than what is on your grocery list, for example.
  • ‘Small things’ do count (in the case of the electricity bill)– cut down on using too many/frequently energy-hungry appliances at home including the dishwasher, stove, or washing machine.
  • Get everybody in the household involved to spend frugally, or to help boost the overall household income.
  • Make a few lifestyle changes when it comes to the car you drive, the house you live in, or the ‘high-profile’ company/friends that you think you need to entertain. Happiness is in the simplistic things – less is more, and becoming a minimalist is the way to go these days.

4.     If you are in too deep, get professionals to help FIX YOUR DEBT woes

What if you have done the above three steps already and have had no luck yet to get your debt amount lowered? The best thing would be:

  • To first go and talk to your creditors to see if you can get some sort of an arrangement going, or
  • What about your financial planner, speaking to that professional someone that you trust?
  • If you want to get the real debt experts to assist, you can indeed consider the help of a debt counsellor. The appointed person negotiates with your creditors on your behalf, helps to lower your instalment amounts over a longer period of time, and helps to protect your assets during this regulated process.

Credit is not bad if managed well. But, life does tend to throw curveballs that can limit your ability to pay your credit accounts on time. Make use of these four fundamental steps to clear your current debt. The road is not always easy, BUT it is possible with some diligence, an action plan, and help from professionals to guide you on your journey to become debt-free again.