Are you looking to get your debt under control? Here are 4 ways to do so:
Step 1: No More Debts
It sounds basic, but the first step is to stop using credit. This can be credit cards, lines of credit, or any other type of debt. Now, the debt will stop increasing, except for interest adding to the balances.
Step 2: Simplify Your Spending
The simpler your business operations are, or your personal life, the less you spend. It costs both time and money when you operate a business and life in a frenzied state. It is hard to directly cut expenses, but by simplifying things, you inadvertently cut expenses.
Step 3: Pay Down the Balances
Pay off the smallest loan balance first regardless of the interest rate. This way, it is psychologically rewarding once you have paid off a loan. Once the small loan is paid off, then use the amounts you were paying towards that balance to pay off the next smallest balance. Remember, we are humans with emotions, not robots (well, not yet).
Step 4: Increase Your Income
When income is increased, it will help you to avoid the need for credit, have excess cash, and have more resources available to pay down your debts. The reason why this is the last step is because if you do not implement the first three, then any extra income may find its way into more unnecessary spending.
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