It seems as though most people are in some kind of debt. Often times, it can be hard to get out of this debt but it is possible.
Some signs of debt problems are more vious than others but generally include: choosing to pay only bills that you have the money to pay, maxing out credit cards and knowing it is damaging your credit score and using credit cards when you know you need to stop. When attempting to get out of debt, making minimum payments is counterproductive as it will take you longer to pay off your debt.
Borrowing from your retirement plan is also counterproductive to getting out of debt. When taking out that money, you will be taxed and also charged a 10% penalty. Borrowing from you 401k will also bring about large fees with having to repay the loan with interest within 5 years. There are many other ways in which people go about paying off their debt that will hurt more than help including: cash advances, direct deposit advances, payday loans and title loans.
There are many better ways in which you can take steps toward a better financial future. The first way is by snowballing your debt: making a list of your debt from smallest to largest and determining how to pay it off. Many prefer to pay the debt with the highest interest rate first while others prefer the confidence boost they feel when paying off a smaller amount of debt initially. When doing this, review your spending and find more ways to make quick money.
The easiest way to begin recovering is by not using your credit cards. By doing this, you will prevent building more debt while paying the rest off. It is also a good idea to pay off as much as you can each month by using and saving every dollar. Pay as much as your budget allows and learn to save money using coupons and shopping during sales. Analyzing where your money is going and cutting some spending is also a good step to take. This can include making lunch instead of buying it or buying store brands instead of brand names.
Once you have paid off your debt, be sure to keep a hold on your money. Although you do not have to keep as tight of a grip, you need to keep track of and save your money in order to prevent yourself from falling into debt again.
Take control of your budget, make a plan and get out of your debt fast!