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How to Declutter Your Financial Life and Repay Debt

Are you going through a financial crisis and need to repay debt? Do you hate the idea of being organized?

It is alright if you’re not a very organized person. Everyone is not the same. But decluttering your financial life can help you get the exact picture of your finances; in turn, it’ll help to get your financial life back in order. In turn, it will help you build a good financial future.

Here are a few ways to declutter your financial life and repay debt.

Start by shredding unnecessary bills

Yes, it helps. When you try to keep every document, you misplace the important ones. Therefore, you need to declutter. Discard documents that you won’t require any more.

Also, nowadays, you have access to online statements and documents; so, keep a hard copy of the necessary ones.

You can divide your bills and documents into 3 categories – to keep, may keep, and discard. For the first category, keep the hard copies as well as the soft copies. For the second category, you can scan copies and store them digitally. And, shred the documents you keep in the discard category.

Organize your online documents

Just keeping the documents online is not enough. You need to keep it in such a way that they’re easily accessible. So, make required folders and keep your files in designated folders. Here also, keep a separate folder of your important documents and name them carefully such that you can find them easily when in need.

Assess your financial position

You need to have a clear idea about your current financial situation, your investments, the amount of debts to pay off, the emergency savings you have, and so on. To do so, you can sit with a pen and paper or create an excel doc to calculate it.

Gather information from all sources about your income and expenses along with debts you need to pay off. Make a list of the debt accounts, interest rates, and the outstanding bill amounts of your unsecured debt. Along with it, maintain accounts of your secured debt (home loan, car loan, etc.) if you have any. You need to be current on your secured debt payments along with paying back your credit card bills and other unsecured debts.

Plan a realistic budget

You might be thinking why I haven’t mentioned this point so far. Yes, budgeting is a prerequisite to organize your financial life. Therefore, list your income and expenses and check how much you’re able to save. Are you happy with the amount you’re saving? Most likely ‘no’ because you have debts to pay off.

So, check where you can cut back expenses.

Do not be too harsh on yourself. Plan a budget that you can follow with ease. It’s of no use in planning a great budget that you won’t be able to follow. Instead, try saving gradually. Increase your savings a little every month.

Set your goals with deadlines

Setting goals is important to take a hold of your financial life. Talk to your partner and set short and long-time financial goals. It will help you make a plan to achieve the goals within the timeline.

For example, your goal can be to repay the debt by the end of this year. Likewise, set long-term goals like saving a definite amount for retirement.

Automate your savings to pay yourself first

You can save a lot of time and effort if you automate your savings to specific accounts. The required amount can get deposited at your chosen accounts on specific dates in a month. For example, you can deposit 20% of your income into a high-yield savings account.

Build a good emergency fund

For a good financial life, you need to have an emergency fund with a good amount. The experts suggest that you need to have an amount with which you can sustain for about 5-6 months without any income; the more the better. Try to save that amount in a high yielding savings account that is easily accessible.

You can use this amount during a financial emergency and avoid swiping your credit cards and falling into debt. Make sure you do not use the amount to satisfy your wants. Use that amount only during a financial emergency. And after using that amount, replenish it as soon as possible.

Do not blame each other

You might have accumulated debt because your partner spends a lot. However, do not blame each other. Rather, discuss and chalk out a plan to repay the debt within the set time. Decide a day in a week when you will review and discuss your finances. You can check how far you’ve achieved your goals, and what needs to be done to accomplish your target.

Plan a suitable debt relief strategy

Choose a debt relief plan based on your financial situation and your deadline. If you want to get rid of debt fast and can’t repay the debts in full, then settlement might be the best option for you. You can search for the best debt settlement companies in the USA to find a good company to work with. Enroll in the settlement program provided by them and get complete professional help to repay your debts.

However, if you can repay your debts in full, then you can opt for consolidation. For that also, you can enroll in a consolidation program and repay your multiple bills through single monthly payments. All other things will be handled by the consolidation company.

Finally, I would like to say that focus on the positive things in your life. Focusing only on the negative things will make you stressed. Therefore, be grateful for what you have, the loved ones in your life who are always with you through thick and thin. Focus on your achievements and your talents and capabilities which you can nurture. The difficult time will surely pass. Stay motivated and declutter your financial life for a bright financial future.

Author’s Bio: Good Nelly is a financial writer who lives in Milwaukee, Wisconsin. She has started her financial journey long back. Good Nelly has been associated with Debt Consolidation Care for a long time. Through her writings, she has helped people overcome their debt problems and has solved personal finance related queries. She has also written for some other websites and blogs. You can follow her Twitter profile.