Debt can feel overwhelming, but with the right approach, 2024 could be your year to take control of your finances and work toward becoming debt-free. Here are four key steps to help you tackle debt effectively.

  1. Understand Your Debts

Start by listing all your debts, including credit card balances, student loans, car loans, and personal loans. Note the amount owed, interest rates, and repayment deadlines. This will help you decide which debts to prioritise, focusing first on those with the highest interest rates to save the most money.

  1. Create a Practical Budget

Track your income and spending to understand your financial picture. Categorise expenses into essentials (housing, utilities, groceries) and discretionary spending (entertainment, subscriptions). Cut back on non-essentials, and use the savings to pay down debt faster. Budgeting tools like Mint or YNAB can help you stay on track.

  1. Choose a Repayment Strategy

Use either the Debt Snowball or Debt Avalanche method:

  • Debt Snowball: Pay off the smallest debts first for quick wins.
  • Debt Avalanche: Focus on debts with the highest interest rates to save more money overall. Pick the approach that motivates you most and stick with it.
  1. Seek Support if Needed

If debt feels unmanageable, consider reaching out to organisations like the National Foundation for Credit Counseling (NFCC) or a nonprofit credit counselling service. They can help you negotiate with creditors or create a debt management plan.

Conclusion

Getting out of debt is possible with the right plan and consistent effort. Start today by understanding your debts, creating a budget, and tackling repayments one step at a time.

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