7 Steps to Take On Your Road to Financial Recovery

The average American under 35 has $67,400 in debt. Between education costs, car loans, credit cards, and bills, it’s easier than ever to accrue large amounts of debt.

If you’re feeling burdened by your debt and wishing for financial recovery, you’re not alone—it’s something that Americans of all ages struggle with. Getting rid of debt can save you money, help you get a mortgage, and can help you reach your goals.

If you’re ready to increase your financial literacy and get your finances in check, keep reading for seven top ways to pay off debt and start saving.

1. Calculate Your Weekly Income and Expenses

To get out of debt, you first need to crunch the numbers and see how much you’re actually earning and spending each month.

Sit down and calculate your expenses, starting with your total amount of income each week or month. Then, work out all of your expenses, including car payments, household bills, medical expenses, and debt repayments.

If your outgoing payments are higher than your incoming, then you’ll struggle to get out of debt. Is there any way you can reduce your expenses?

Often, this can mean selling your car, taking on a roommate, going for a run instead of paying for a gym membership, or eating out less.

2. Set Up Automatic Payments for Your Savings Account

Once you have a budget in place, you want to start building up your wealth by paying into your savings account on a regular basis.

An easy way to ensure you stay on track with your savings goals is to set up an auto-transfer from your checking into your savings account, which will put you on track to having money saved for a rainy day.

Once the money hits your savings, you’ll be less likely to spend it as it’ll be moved into a separate savings account and away from your daily checking.

If you have a particularly good month when it comes to savings, you may want to transfer extra funds to help you reach your savings goal faster.

3. Make More Than the Minimum Payments

When getting back on track and learning to save money, you need to think about your credit card payments. How much do you pay off each month?

If you’re only making the minimum payments, then you’re only chipping away at the interest and not paying off your actual debt.

Many of us turn to payday loans for people with bad credit when we’re in need, but the interest rates can be high.

To get in the clear sooner, make more than the minimum payment each month. Although you’ll have less extra at the end of the month, it’s worth it for the satisfaction of seeing your balance drop down to zero.

The more you pay each month, the sooner you’ll be done with credit card payments.

4. Pick Up a Second Job

If you have the time, picking up a side hustle or second job is the best way to earn more money to pay off your debt.

Depending on your schedule, you may want something where you can set your own hours, such as delivery driving, online work, or childcare.

The job only needs to be a temporary measure as you work towards paying off your debt.

5. Pay Off Credit Cards

If you have multiple credit cards, you’re never going to be debt-free if you keep piling up debt. Unfortunately, opening up new credit cards is extremely easy, especially with retail stores, who actively encourage spending on their own card.

First, pay off any store cards and cut them up—retail store cards make the temptation to shop too great, and the bills will catch up to you.

Ideally, you only want one or two credit cards for emergencies, and you want to pay the balance in full each month.

6. Talk to an Advisor

Sometimes, we can become overwhelmed by our debt. It impacts not only our financial health, but also our mental health.

If you’re unsure how you’ll ever be debt-free, it’s hard to see the light at the end of the tunnel. If that sounds familiar, you may want to speak to a debt counselor or financial advisor.

Often, they can work with your creditors to combine your debts into one reasonable monthly sum, which can make it easier to manage. Or, you can get some coping tips on budgeting, financial stress, and looking after your mental health.

7. Give Up Expensive Habits

It may not be something you want to do, but when it comes to saving money, you need to spend less. Often, this means giving up expensive habits that we can’t afford.

This could mean shopping, vacations, hobbies, or beauty care. You don’t need to give up the things you love, but try to find more affordable alternatives.

For example, if you have your hair dyed, can you switch to doing it at home for a few months? Or going to a cheaper salon?

Once you start thinking about your spending, you may be surprised at how many creative ways you can save.

Start Down the Road to Financial Recovery Today

If you’re living in poverty, you know how hard it can be for both you and your family. However, if you’re determined to get out of debt, then you can make it happen!

Start by using the tips above to comb through your finances and work on strategies for spending less and earning more. It’s not always easy, but soon you’ll be on your way to financial recovery and freedom.

Did you find this article useful? If so, please browse some of our additional content to learn more.