• Cassie Edwards

Don't be ashamed to talk about debt!

how to get out of debt, how to get rid of debt

Do you live in fear or embarrassment of your debt? It’s time to break yourself free from that way of thinking.

I lived in debt for most of my adult life. I was literally living paycheck to paycheck and I thought I would never be able to get out of this vicious cycle. But I did!

In the current climate so many people have lost their jobs and are accumulating debts daily! Most of us have some sort of debt whether we talk about it or not. There is no shame, embarrassment, or regret necessary. In fact, debt can be a good thing sometimes, debt can help you have experiences you otherwise wouldn’t have. Take owning a house for example. Would you be able to own one without a mortgage? I am guessing that the chances are slim, so in this case, debt can be good.

Even if you have ‘other’ debt, don’t be ashamed. Instead, it’s time to hit the debt head-on and learn how to manage it.

What is ‘Good Debt’?

You probably hear people talk about ‘good debt’ and ‘bad debt.’ While there really isn’t a defined distinction between the two since it’s fairly subjective, you can use the following guidelines to help you decide what good debt is:

Ask yourself, does the debt provide value? A few good examples include student loans (you get an education and hopefully a better job); a mortgage (you get a house that may appreciate and give you tax benefits or you buy a house which you can rent out to provide an income).

Does the item you’re buying depreciate? Let’s say you’re buying a TV or something bigger, like a car. Neither of these items will appreciate. In fact, they will depreciate. You’ll then pay interest on the loan you took or the credit card charges. That item is now even more expensive/worth less than what you paid for it.

Will the loan or debt make things better for you? Maybe you want to start your own business and need capital or you want to make home renovations to make your home bigger, more modern, or more accessible. The money spent on these items makes things better for you and even though it’s debt, it may be warranted.

How to Get out of Debt

If you do have debt, whether good or bad, it’s important to know how to get out of it. It all comes down to the following principals:

· Prioritize the highest interest debt. Any debt that you pay excessive interest on should be paid off first. Always make the minimum payments to all debts, but focus any ‘extra’ funds you have on the debt with the highest interest rates.

· Negotiate the best terms. If you have a lot of debt, consider consolidating it. For example, if you have great credit, you may be eligible for a 0% APR balance transfer credit card. Put all of your credit card debt on it and pay it off as quickly as you can. Try dividing up your payments into equal instalments so that you pay the debt off in full before the 0% APR expires.

· Ask for help. If you’re in over your head, ask for help. Don’t ignore the debt because you’re embarrassed. That only digs you further into the hole with accrued interest and penalties. Talk with your lender, look for debt consolidation options, or ask your lender for payment assistance options to make it easier to get out of debt.

Debt is nothing to be ashamed about, whether you have a little or a lot. The key is to empower and educate yourself so that you know what debt you have and the best way to get out of it. If you have to take on new debt, just make sure it’s for a reason that improves your life rather than gives you just another debt to weigh you down.

Get free debt advice from Step Change here

Download your free budget planner here or download my free money making ebook here

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