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Finding financial freedom with a debt elimination plan

On Behalf of | Mar 13, 2023 | Debt Relief

With the cost of living in California, many residents struggle to keep their finances above water. Living with debt is stressful, and every unpaid bill adds to your anxiety. An intentional debt elimination plan can help you work toward a debt-free life.

Getting hold of your debt

The first step to developing a plan is learning the extent of your debts. Listing what you owe to different creditors often makes debt feel more manageable. For a better picture, list the interest rates on your debts and the total you owe.

Once you have this list, you can start to plan. By comparing your income to your monthly payments, you will understand how to budget for successfully recovering from debt. If the minimum payments exceed your paycheck, you might also start to consider whether declaring bankruptcy is a better option.

Strategies for moving forward

Finding debt relief requires adjustments to several financial aspects of your life. You want to stop your debt from growing, so you must reduce your spending to live within your means. Developing a realistic budget focused on necessities is critical at this stage.

Some people use a snowball method to pay down their debts. After making the minimum payments on larger amounts, they use any excess income to work on the debt with the smallest amount. Eliminating smaller debts provides a sense of accomplishment.

Another strategy involves attacking debts by interest rate. The higher the percentage, the faster the debt will grow. In this method, you will first pay off the amounts with the highest interest rates.

Working toward long-term financial health

Recovering from a large amount of debt will take time and discipline. However, by developing a reasonable plan to pay off what you owe, debt relief will soon be within your reach.