When you exchanged vows, did you take a moment to actually think about what you were committing to? In the standard version, there’s something in there about “richer or poorer,” which means that you agreed to stand by your partner’s side even when liabilities exceed assets.
But it’s no secret that all unions don’t last forever.
According to the American Psychological Association, 40 to 50 percent of marriages end in divorce. It’s been widely assumed that a large percentage of these individuals had marital issues that stemmed from finances. In fact, a recent study conducted by assistant professor Sonya Britt of Kansas State University revealed that “arguments about money is by far the top predictor of divorce.”
If you’re in debt, finding a way out can be tough and frustrating, particularly if you’re not the one who incurred the expenses in the first place. As a result, you and your partner must be on the same page to actually take action and dig yourself out of the hole.
Truth be told, there is no magic formula for eliminating debt. It just boils down to your commitment to get to the root of the problem and ax the outstanding balances in the most strategic manner possible.
Now, the part that you’ve all been waiting for. Drum roll please …
1. Dial up the creditor
This is the one of the most overlooked, yet simplest ways to drive down the accumulation of interest that can make credit card debt unbearable. If your balance is extremely high, even a reduction of a few percentage points in your interest rate can save you a substantial amount of cash.
2. Implement a strict spending plan
The word “budget” is a bit militant, so I’ll use “spending plan” to make my point. Getting out of debt (and staying debt-free) will require you to be disciplined with your finances. That’s where the spending plan comes in, as it will dictate where your money goes before the month even gets started.
Need help creating one, even if money’s tight? Click here.
3. Cut the extras
Eliminating wants or unnecessary expenses seems like a no-brainer, yet few people actually do so. Anything that is not a necessity needs to be reduced, or eliminated if possible, until you gain some traction in the debt-reduction process.
4. Beef up your income
Unless management is handing out raises at your place of employment, you’ll want to increase your income in any way possible, whether it be through overtime, freelance work, or a part-time job if time permits.
5. Handle surprise income with care
Received a surprise package in the mail? That’s both good and bad news, but we’ll cover the latter first. Sorry, but any extra income must be allocated to debt to pay it off as quickly as possible. On the other hand, the good news is that you now have another source to use toward debt.
Lights, camera, action!
Not sure how to get started? These concrete steps will help:
- Face the music. Assuming that you haven’t already done so, it’s time to sit down and chop it up. The first step to dealing with a problem is admitting that you have one, and outstanding debt is no different.
- Make a list. Once you have laid everything on the table, devise a detailed list to determine where you stand numerically with the outstanding balances. It should include the creditor’s name, phone number, minimum payment, APR, available credit, and outstanding balance.
- Determine how much cash you need. You can do this by plugging the balance, APR and monthly payment amount into the Federal Reserve’s payoff calculator. It will give you an accurate idea of where you stand and what it will take to accomplish your objectives.
- Devise a plan of action. It’s usually best to focus on the debts with the highest interest rates so the insomniac interest will not suffocate you, at least in the case of credit cards. Your specific road map will depend on how long you want to continue drowning in debt.
- Execute. Before doing so, remember to move delinquent accounts to the top of your list of priorities and stop using the cards immediately to avoid any temptation and setbacks.
What tricks have you and your partner used to quickly eradicate outstanding debt? Let us know in the comments below or on our Facebook page.