How to Get Out of Debt: 4 Steps to Financial Freedom

Being in debt often causes emotional stress and financial strain that can affect your life as a whole—especially when you owe a large sum of money. Many people find themselves wondering how to get out of debt quickly, so they can establish stability, freedom, and a greater sense of calm. At the very least, they want to feel like they have a debt plan and that their personal finances are under control.

The 4 steps below offer guidance on steps to pay off your debt and make the process less stressful. Getting out of debt IS possible. It just requires you to take the time to get your finances organized and determine which debt reduction strategies are right for you.

River City FCU has many debt reduction tools available to help minimize your total debt and make it much easier to manage—specifically our signature loan— which we will discuss in step 4. First, see which steps you need to take as you get started with your debt-payoff process.

1. Make a List of What You Owe

Consider everything you owe: auto loans, student debt, mortgage, credit card, personal loans, and more. This first step will require you to log into your various accounts, look at your billing statements, and/or check your credit reports.

For each debt, write down the amount you still owe, your interest rate, and your monthly payment amount. Afterward, add up all of your monthly debt payments, so you can get a full picture of the amount you’re putting towards debt every month.

Even taking inventory of your debt can help you feel more in control, especially if you were scattered or unsure of your total. You may also feel overwhelmed, but remember that you’re making progress and to take it one step at a time.

2. Create a Budget and Understand Your Spending Habits

The next step is to make a budget. Calculate your expenses, and see how much you have left to put towards your debt. It’s important to be realistic at this point with how much you can reasonably pay off every month. For example, if you have $500 left after your expenses, that doesn’t mean you will be able to put the full $500 toward your debt. Consider where else you spend your money other than your main expenses (such as eating out, buying clothes, or traveling).

Take a look at what your spending habits are by looking at your past bank statements. See where you spend the most money and where you can cut down in order to redirect that money toward paying off your debt. It is better to be conservative with this estimate to allow room for error and avoid increasing your debt more. However, make a concentrated effort to reduce overspending while still being reasonable. For example, maybe you won’t be able to stop going out to eat, but you can limit the number of times you go out every month.

3. See If You Can Lower Your Interest Rates

If you want to get out of debt, reducing the amount of debt that you owe is a key but often overlooked step. Securing a lower interest rate lowers the total amount of money you would pay toward your debt. You can try to do this by reaching out to the places you owe and asking for a lower interest rate. However, many companies will have a limit as to how low of an interest rate they can offer you. They also may not be able to lower your interest rate at all.

With many credit card interest rates over 20%, opting for a signature loan, such as the one offered- by River City FCU, can be a highly effective way to pay off debt quicker. With APR* rates as low as 8.00%, using a signature loan may help minimize the total amount you owe.

*APR stands for Annual Percentage Rate as of July 18, 2022 and subject to change without prior notice. Rates shown are the lowest available for each term listed. All loans subject to approval, your rate may be higher based on credit performance. Rates apply to new Signature Loans or loans refinanced from other institutions.

4. Choose the Debt Payoff Strategy That Works Best For You

There are several different debt repayment strategies. Most of them suggest paying down different debts one by one. For example, the debt snowball method is when you pay small balances to get quick wins, then move on to the next. On the other hand, the debt avalanche method has you pay down debts with the highest interest rates first.

However, using a signature loan is another option that can work better for many individuals. Here’s why:

• A signature loan dramatically simplifies your debt payoff strategy. With a signature loan, you’ll have just ONE single monthly payment. It’s much more streamlined than juggling many different debts. Every month, you know you’re making progress towards your debt as a whole rather than one debt at a time. One caveat is that a signature loan may not cover all of your debts, such as a large mortgage, but it will still help simplify your debt repayment process dramatically and reduce the total amount you owe if you get a lower rate than your current debts.

• A signature loan often means owing hundreds or thousands of dollars less. With lower interest rates than many other debts, a signature loan can decrease the total amount you owe over time. This also helps you pay off debt quicker.
  

Interested in using a signature loan to reach financial freedom faster? Click here to learn more about River City FCU’s signature loan.

Whichever strategy you choose, remember that financial security as a whole comes from managing your money well. As you work towards paying off your debt, go back to step 2 from time to time to revisit your spending habits, see if you can pay off even more towards your debt every month, and ultimately make your way towards increased financial well-being.

Achieving financial freedom is a long game, and what’s most important is that you take steps towards it, no matter how small. Start today by seeing if a signature loan could accelerate your way to prosperity.

Need something else?

River City FCU has been committed to helping our community in San Antonio since 1936. Whether you would like to get started with financial counseling, opening a savings account, or exploring our personal loans, we would be happy to help.

If you have any questions about our debt relief options or would like to learn more, please call us at (210)-225-0708 or visit us online at www.rivercityfcu.org.