Get Out Of Debt

Proven Strategies To Get Out Of Debt

Running into debt isn’t so bad. It’s running into creditors that hurts.” – unknown

DebtorsPrison-WhitcombInsuranceAgencyBeing in debt sometimes feels like being in prison…in fact, up to and including part of the 19th century, people who were unable to pay off the debt they owed, actually did go to a prison that was built specifically to hold debtors – “debtor’s prison“.

You may wonder how that helped the person they were indebted to, but while in prison, how could they pay then? But while in prison, the debtor worked off their debt by the labor they were assigned to do. They would remain in prison as long as it took to work off their debt as well as whatever it cost for their incarceration.

Thank goodness those prisons don’t exist any longer, they ended in 1869, and today there are other ways for people to deal with the debt they have accumulated that they are unable to pay.

Staying, or getting out of debt is the better strategy…

Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after.” – Joyce Brothers

There are several kinds of debt that you might have, some more acceptable than others:

  • House mortgage
  • Car loans
  • Student debt
  • Credit card debt

DebtStress-WhitcombInsuranceAgencyBeing in debt can be stressful and financially limiting, but it doesn’t have to be a life sentence. Follow these steps, and instead of “charging“, be in charge of your finances and your life and become debt-free:

  • Understand your debt: Make a list of all your debts, including their interest rate, so you are aware of exactly where you stand. Determine if your debt is due to…
    • Loans – such as home mortgage, auto loan, small business loan or student loan. This type of debt is not usually bad, but if you have too much of it, it can keep you from covering your living expenses or accumulating savings.
    • Unavoidable circumstances – sometimes life just happens, and circumstances beyond your control can cause you to need to create debt, things such as medical issues, divorce, and unemployment. These types of debt usually carry high interest rates, that can cause a domino effect….as you try to pay them off, other obligations get neglected and you need to take on more debt to keep them from getting behind. This kind of debt makes you feel so out of control.
    • Over spending – It’s easy, but not wise, to let your spending on non-essentials get out of control. Simply put, “champagne taste on a beer budget” or living beyond your means. This type of debt can also cause your debt to spiral out of control.

Time to take control of your spending…

If one wants to get out and stay out of debt, he should act his wage.” -unknown

BudgetToGetOutOfDebt-WhitcombInsuranceAgencyBudgeting is not a very popular word among most of us, but it is a great help. No matter why you are in debt, or if you’re trying to stay out of debt, budgeting will help you stay in control of your spending. Use your budget as a tool, and compare the expenses and expenditures of each month.

  1. Part of your budget should be to divide your spending into 2 categories – mandatory and discretionary, and allocate your income appropriately. If you’re trying to get out of debt your discretionary money may need to be cut back, and the amount you would have normally spent in that category should be applied to outstanding balances.
  2. Make every effort to pay your bills when they are due, this will help you avoid late payments, service charges, and other fees.
  3. Without neglecting the larger debts, pay off the smallest debt as quickly as you can. When that one is completed, start on the next smallest debt, until they are all paid off.
  4. For a time you may need to cut out expensive entertainment or hobbies.
  5. You may need to lower your mandatory expenses:
    1. Eating is necessary, but eating out isn’t, and it’s more expensive than preparing your own food. And while your at it…use coupons at the grocery store…digital coupons make the process very easy.
    2. Examine your cell phone plan, and see if there is a way you can cut back.
    3. If possible, carpool to work or use public transportation rather than driving your own car.
    4. If you are renting a house or apartment, you may need to consider downsizing, or possibly talk to your landlord to see if there is a possibility of negotiating less rent.
    5. If you own a home and you have spare rooms, you might consider renting one out.
    6. Cut back on cable services.
    7. If cutting back on your spending isn’t enough to pay off your debt, you may find it necessary to increase your income by asking for a raise, getting a 2nd job, doing side work, collecting debts owed to you or selling jewelry, or household items.

Getting out of debt may feel overwhelming and out of reach, but with determination and creativity, it can be done, and you’ll sleep so much better at night!

At Whitcomb Insurance, we would be happy to sit down with you and give you all the information you need, and answer all your questions so you can make the decision that is right for you and your family.

Along with great insurance options, we also offer Financial Services. You can count on us to be totally honest and upfront with you!

Contact us or give us a call at 425-391-8731.

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