Personal Financial Planning- Getting Out of Debt

An average individual will normally experience borrowing on some type of credit at some point. While some people know how to manage their financial liabilities efficiently, others are stuck in debt, which can be financial, mentally and emotionally stressful. Yet not all debt is negative. Good debt, called l average, is money that you borrow to finance an appreciating investment. Home mortgages usually are good debts since the value of your property tends to increase as your mortgage shrinks. Student loans should fall in this category, if you can earn a college degree and turn that into a job. It's the other variety, bad debt, that gives the word a bad name. Bad debt can quickly grow from nuisance to monster. Credit card debt is by far the most common. Auto loans are a close second.


What can you do about it if you are caught in the debt vice?


The most important step is to figure out how much you owe and what you can do to eliminate it but here are 10 pro tips.

  • Prioritize Paying Off Higher Interest Loans First

  • Set a Specific Goal to be Debt-free

  • Apply the 'Profit First' Accounting Method

  • Get Professional Advice to help with Debt Settlement

  • Find a Way to Increase Your Income

  • Review assets and convert some in cash

  • Prioritize High-risk Debts First

  • Stop borrowing and using credit cards. Cash only

  • Change debt enabling habits( Dining out, Entertainment)

  • Create a budget that helps you pay off debts


What are the other ways to lower debt?


There are several ways to help reduce the cost of existing expenses to help lighten your debt load. Here are the most common ones

  • Refinancing

  • Consolidation

  • Renegotiating payment terms wball vs Ladder Approach

  • Move forward and start saving


When You Need Advice- OFWF is here to help you.


After you acknowledge bad debt is a problem, know that help is available. You don't have to go through this alone. However, the first two steps are the biggest: acknowledging that you need help and being willing to get it. OFWF can help you with financial advice on how to produce a workable budget and pay down your debt,


© 2018 by O'Donnell, Ficenec, Wills & Ferdig, LLP