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Personal Finance FAQ

Personal Finance FAQ Series: How Can I Get My Debt Under Control?

Over the next 25 days, I’m going to be providing a series of videos which answer some of personal finance’s frequently asked questions. A tip of the hat goes to the Punny Dumbest Personal Finance Questions series for the inspiration!

So, without further ado, here is the first of the series answering the question:

How Can I Get My Debt Under Control?


The transcript for this video follows below.

Being in debt is very stressful and can oftentimes feel crushing. Sometimes it’s so large that you don’t even know where to begin, much less how or when you’ll be able to get it under control.

Here is what I recommend for getting your debt under control:

  • Track all of your expenses. You can use an online tool like Mint.com or a computer tool like Quicken, or even the old homemade pencil and paper method, but you have to track everything, cash, credit cards, automatic payments.
  • List out all of your debts. If you don’t even know how much you owe or to whom, go to annualcreditreport.com and get a free credit report. Don’t sign up for any of the services; just get the credit report from each of the agencies. Those reports will list what you owe.
  • Look at what you’re spending and identify where you can cut back. Do you have recurring subscriptions that you don’t use? A monthly gym membership when the last time you saw a gym was middle school recess? Be brutal. You’re in a crisis, so you need to take drastic action.
  • Set up bill pay with your bank and send automatic payments to your credit cards on the day you receive your paycheck. If you don’t have the money in your account, you can’t fritter it away. Pay off all of your important bills and your credit cards automatically so that you make sure that you don’t go further in debt.
  • Call every lender and see if you can get an interest rate reduction. Oftentimes, all you have to do is to call the credit card company or the car loan company and ask for a reduction in the interest rates and a waiver of the fees and they’ll do it for you.
  • Look for ways to earn extra income. There is nothing too menial for you to do when you’re in a hole. Deliver pizzas. Cut grass. Walk dogs. It doesn’t matter. You’re looking for ways to make more money right now. Don’t fall for get-rich-quick schemes, where you have to pay a fee to be able to start a business. Find work the old-fashioned way – hustle.
  • Identify goals and rewards for yourself. Set incremental goals and little rewards which will give you incentives. So, for example, if you’ve paid down $1,000 on your credit card, treat yourself by going out to eat at your favorite pizza joint. Don’t go overboard and pay cash.
  • Tell someone what you’re doing and ask them to keep you accountable. You need a personal finance accountabilibuddy to help you along the way. Doing it alone is going to be tough, so find someone who will be your source of strength when it seems tough.

If you take these actions, you should notice that you’re making progress, and you’ll chip away at your debt. Imagine how it’s going to feel once it’s all done!

What questions would you like to see me answer? Leave me a comment and let me know!

By

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

2 replies on “Personal Finance FAQ Series: How Can I Get My Debt Under Control?”

Deb–indeed! It’s about being intentional with your life. Your spending should reflect your priorities in life, but until you have a way of tracking your money, you can’t align your spending with your priorities.

Thanks for dropping by! I look forward to reading more of your comments!

Tracking our expenses for some are tedious and can achieve less but I have experienced how essential and effective it is to determine unnecessary lifestyle or wants.

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