Almost any form of debt is antithetical to the Foundry lifestyle: credit card debt and car loans are out of the question; college and home loans are a maybe, but should be avoided if possible. If becoming financially independent is akin to climbing a mountain, taking on debt is like leaving the trail to take a crap in some poison ivy.
Not having any personal experience with debt puts me at a disadvantage when it comes to writing about the topic. Luckily, Foundry reader Randolph Warner offered to write up some tips on getting oneself out of debt. Randolph writes about personal finance and business. His most recent work is focused on helping people earn Master of Finance Degrees.
Take it away Randolph…
Freedom from debt is something that many people are seeking. Nothing about pulling yourself up out of a financial hole is easy, but there are many steps that you can take to make the process a little simpler. To give yourself a little bit of assistance, here are a few tips to help you along your path to regaining financial freedom:
Assess The Situation
Many people know that they are in great financial distress, but really do not have a lot of specific knowledge regarding their situation. The best thing that you can do is to gather up all the information you have, including the current bills you are receiving and the information that can be obtained from your credit report to get a complete list of what you owe and to whom you owe it to. Then, you can see where you’ll be 6 months, even a year from now, assuming things stay the same.
Take your newly acquired budget and order all your expenses so that the smaller amounts are at the top of the list, and put the rest in ascending order from there. The game plan is to start making payments on these smaller amounts to begin paying off items that you have to check them off of your list. With each of these paid off things, your credit score then has room to improve.
Get Some Help
Many services are available to give people an opportunity to lower their overall debts to specific collectors. Consider how much easier it might be for you to pay off a bill if it had hundreds of dollars shaved off of the total amount. These services specialize in bartering with companies to get them to settle at a lower amount, which could theoretically save you thousands of dollars, depending on the current debt situation you are in.
This is not a problem that you are going to be able to solve today. You have to take some time to figure things out and make changes. Professional assistance can help save you a lot of money, but it still might not be something that you can take care of all at once. Pace yourself and ensure that you are not putting significant financial strain on yourself to take care of this, which could result in a cyclic return to debt in the future.
All kinds of things play a role in reducing debt. Some people think debt consolidation loans are the way to go, but these carry problems of their own. Never leap at an opportunity like this, no matter how promising it may sound, as it could have severe consequences for even the slightest mistake or setback.