Unfortunately, debt is something that many of us – from Millennials to GenX families to baby boomers have to face daily. At times, the pressure to pay bills and keep your head above water can feel oppressive and overwhelming. If you’re reading this post, just know that Four Points knows how you feel and has some good news – you can pay down your debt and lessen the financial pressure you’re facing.

Here, we share strategies for stopping the cycle of debt and beginning the process of paying it down.

Tip #1 – Create an Emergency Fund

It may seem strange to start a debt payoff strategy with saving money for a non-pressing need or overdue bill, but there is wisdom in starting an emergency fund today. It’s often the most critical first step to take when paying down debt. The reason many people fall into debt over and over again is because they don’t have a financial cushion built up to handle everyday unexpected expenses. A $400 or $500 car repair or medical bill can turn into double or triple that when it’s put on a high-interest credit card with no plan of how to pay the principle off.

Start with a small goal of $500 or $1000 and work to put a little away every month until you reach that amount. Then, try to keep building it up (and replenishing it as needed) so that when the next car repair or home cost pops up, you’ll have a better way to pay for it.

You can literally open a checking and savings account with Four Points and have a small amount automatically transferred from your checking to your savings account each month, where you can save it for your emergency fund.

Tip #2 – Figure Out Exactly How Much You Owe

This can be painful at first but do it. You may have to call student loan offices, gather credit card statements or call other creditors to find out exactly what you owe. Figure it out and write it down. Be sure to include the interest rates and minimum payments required on each debt.

Take a deep breath; walk away for an hour or a day if you need to and then sit down and make a plan about how to pay it off.

As you consider how to pay off your debt, you may find that a refinancing of some of your debt to a lower interest personal loan or lower interest student loan may be a viable option.

Tip #3 – Start Tracking Your Spending

Chances are good that you aren’t currently tracking your spending. That’s okay. Lots of people are in the same boat, but today is the perfect time to turn over a new leaf and start keeping track of everything you spend. When you don’t, it makes it that much easier to get into debt because expenses can add up a lot faster than we realize. How you do it isn’t as important as doing it. Whether you create a spreadsheet in Excel, use an online tool, or you write it down on a legal pad, just start keeping track of your expenses.

After a month or two, you’ll begin to see trends in your spending and more importantly, opportunities for saving. You’ll be able to slash your expenses and apply that saving toward more aggressive efforts to pay down your debt.

Debt can feel stifling but with a plan in place and following some sound strategies, you can free yourself of its grasp.

How do you deal with your debt? What tools or strategies do you follow for tracking your expenses? Do you think an emergency fund is a good idea? Why or why not?

Regular Print and Complete budget (PDF)

Youth Print and Complete budget (PDF)

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