7 Signs Your Debt is Spiraling Out of Control and How to Fix It

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 What to Do If You Have Too Much Debt

If any of the above factors describe your financial situation, it’s time to find the road to recovery. Instead of an ongoing struggle, here are some changes you can make to your lifestyle.

Cut Your Household Spending

During hard financial times, the first thing you need to do is to create a budget. When you’re struggling to pay your bills, you need to find extra ways to cut down your spending and use the extra cash to pay down your debts.

By creating a bare-bones budget, you’ll find extra money in your salary, but it will require sacrifice. That means no eating out, buying clothes, or spending money on entertainment for a while. This might be too strict for a long-term solution, but it can help you create better habits when it comes to managing your money.

Pay Off Your Debts Strategically

Got more debts than you can count? When juggling various loans and repayments it can be hard to keep track. Maybe you’re just paying the most urgent debt, or throwing extra cash at random bills with no strategy behind it. If this sounds familiar, you need to get organized and create an action plan.

Start by sitting down with your spouse or partner, and figure out the cost of each debt you owe and to which company/bank. Create a list of the current balance, the monthly payment, and the interest rate. Then, you can figure out the best way to tackle each debt. For instance, if you have several smaller debts you can attack them using the snowball debt method. If you have debts with a high-interest rate, like credit cards, you can use the debt avalanche method to your advantage by tackling the highest interest balances first.

Consolidate Your Debts

If you have high-interest credit card debt that you need to tackle, a balance transfer credit card can help you buy some interest-free time. Some credit cards offer a 0% APR for 9 – 21 months, and some come without a balance transfer fee.

This will help you beat back your debts significantly as you won’t need to pay interest during the 0% APR period. Just make sure you read the fine print before signing up for an additional credit card.

Keep in mind that to make the most of a balance transfer you need to put in the work. The idea of this tactic is to pay off the full balance before the introductory period ends. If you don’t, you’ll be stuck in the same situation that you are already in – potentially with an even higher interest rate.

Start a Side-Gig

Now that you’ve got a debt repayment strategy in place, it’s time to find a way to earn extra cash. If you could earn an extra few hundred dollars each month, it’ll be much easier to pay back the money you owe.

Alongside your full-time job, one way to make extra money is to start a side hustle. Luckily, it’s easier than ever to find part-time work for all kinds of tasks, like delivery driving, assembling furniture, and walking dogs. For some more ideas check out 7 Money-Making Hustles You Can Start in 2018.

Stop Spending

The best way to cut down on debt is to stop digging yourself into a hole. Unless you begin to change your habits it’s likely that you’ll never be free of debt or financial trouble. Consider switching to cash or debit only if you can’t trust yourself to use your credit card responsibly.