Pulling Yourself Out of Debt 101: Basic Things You Need to Know

This article was last updated on April 16, 2022

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Debt is something that almost all of us experience at one point or another. A lot of us are still trying to live with a huge financial burden. But managing debt doesn’t have to be like moving an immobile mountain or clearing a never-ending pile. You can get yourself to a place where you feel in control, and that you’re making progress.

But you can’t just rush into managing your debt without learning a few things first. If you go into it with no background knowledge, you might end up bringing more debt onto yourself. That’s the opposite of what we want.

So, buckle in and get ready to learn some stuff about managing your debt. We’ll go over some of the easiest ways to get rid of debt and eventually get you into green. Then, you’ll just keep sourcing. You’ll be jumping for joy in no time.

Understanding Your Bank Account

First you should have a full and thorough understanding of the types of bank accounts that you are using. Are you using a simple checking account? Maybe a credit line has been open and accruing debt? Or is that savings account looking a little empty? Bank accounts are a complex beast on their own so let’s just go over the basics.

If you have a checking account, that money is pretty stable. It won’t go anywhere, but it also won’t increase on its own. This account is meant for everyday transactions. There is no interest on this puppy.

Savings accounts, on the other hand, live off accrued interest. But how much interest you earn is really up to you. It depends on how much money you can afford to put into your savings account every month. You want to put enough to get a decent amount of interest without having to constantly make withdrawals. If you withdraw too much at once, you’ll have to pay fees. These accounts should be handled carefully.

A credit line is a good way to make your credit look good, but it requires a restraint that is difficult for most people. Now, if you’re in debt it will be difficult to have good credit. This can always be changed.

The simple rule for spending on a credit card is: only spend less than you have in your checking account. This means that you can always pay off your debts right away. That will slowly make your credit higher.

Loans and Stocks

Stocks are a great way to make some money with the cash that you already have. These allow you to make smart business decisions and reap the benefits. If you are in debt, stocks can help set you free.

But stocks should be approached carefully and with a complete game plan in mind. This is nothing to dive into. First, an understanding of stock loans is necessary because you can’t afford to dive into a process you don’t understand.

Of course, the goal is to not have any loans or debt. But, taking out a small stock loan could benefit greatly in the future.

Just keep your head on your shoulders when you are wading into the world of the stock market. Never make any rash decisions and fully do your research before choosing any stocks.

Ready to Overcome Your Debt?

These two reminders are the most important when you are ready to commit to climbing out of debt purgatory. Focus on your credit, how you use your bank accounts, and look into stock options to prevent your debt from swallowing you whole. Once you can handle these topics, you can move onto budgeting and downsizing!