9 Steps to Creating a Plan to Get Out of Debt Immediately

See the step-by-step guide on how to create a plan to get out of debt

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Developing a plan to get out of debt is very important for you to regain control and financial balance. 

Debts, late payments and rising interest rates are some of the issues that keep Brazilians up at night.

In fact, almost half of Brazilians (42%) who has an overdue account in the Positive Registry, is over-indebted, that is, with debts out of control.

Although it is difficult, with determination and control, it is possible to get out of debt.

Therefore, we have outlined some steps to help you reorganize your financial life. To learn more, continue reading.

If you are in debt, know that it is possible to get out of this situation.

See the step-by-step guide to creating a financial plan and getting rid of debt once and for all:

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1. Organize your debts

The first step is to organize all your debts.

List everything that is late on payment: credit cards, household bills, overdraft, among others.

Next to each item on the list, enter the monthly payment amount, total due, and number of installments remaining.

Many people don't know exactly what they owe, which makes organization even more difficult.

In fact, in many cases, the problem starts precisely with the lack of spending control.

Therefore, the first step of the plan is essential for you to get rid of debt. This can be done in a spreadsheet or in a finance notebook.

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2. To create a plan to get out of debt, do your financial diagnosis

Personal financial diagnosis is the survey of your income and all your expenses.

In other words, it is a solution used to completely map the personal or family budget.

This way, you can know exactly how much you earn, how and how much you spend your money and the total value of your debts.

To do this, you first need to answer a few questions:

• How much do you earn?

• How much do you spend per month?

• What are your fixed and variable expenses?

Ideally, these notes should be made monthly, so that you can really organize yourself and never lose control of your accounts.

3. Cut unnecessary expenses

For a certain period of time, you will need to cut your expenses.

This step is essential for you to organize your budget, save money to pay your debts and build up your emergency fund.

Many people get into debt because, in addition to spending more than they earn, they also cannot avoid impulsive purchases.

So, take the opportunity to analyze your budget and see which expenses can be cut.

Some examples of expenses to reduce or eliminate:

• Excessive use of credit cards

• Subscriptions to magazines you don’t even read

• Eating out and happy hours

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4. Create an action plan

Once you have a better understanding of the value of all your debts, it’s time to think about creating a plan to get out of debt.

Ideally, you should define an order of priority, that is, make a list of the debts that should be negotiated first.

In this part, in addition to thinking about a plan to get out of debt, it is also important to think about ways to cut or even eliminate some of your expenses.

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5. Start negotiating your debts

After listing all your debts and putting together an action plan, contact your creditors to renegotiate any outstanding amounts.

It is important to remember that you should only move on to this negotiation phase if you can deliver on what was agreed.

Just as you are interested in paying off your debts, companies also want to receive payment. Therefore, prepare a payment proposal, considering how much you can afford to pay off everything you owe.

If possible, try to pay the debt in cash, so that you can negotiate a more advantageous discount.

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6. Participate in trade fairs and negotiation campaigns

Some financial institutions and private companies have the habit of promoting trading fairs throughout the country.

Fairs and campaigns are great options for you to get good debt settlement proposals within your available budget.

These campaigns take place both in person and online.

Keep an eye on the social networks and official communication channels of these institutions, so that you can know when these fairs will take place.

These are very interesting options, as they normally offer greater discounts than the market average.

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7. When creating a plan to get out of debt, consider the possibility of using the FGTS

In this section, you can also think about the possibility of using the FGTS to pay debts.

The Severance Pay Guarantee Fund (FGTS) It is a labor right. Under certain conditions, it is used to pay debts.

This involves withdrawing funds deposited in accounts and using them to pay off financial debts.

Also keep an eye out for emergency withdrawals.

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8. Set goals to get out of debt

Setting goals is important so that you can achieve your dreams in both the short and long term.

However, it is important to remember that you need to set realistic goals so that you can really organize yourself and achieve what you want.

In other words, when setting spending reduction goals, keep in mind which expenses can actually be eliminated or reduced, in addition to considering your current financial situation.

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9. Look for extra income to get out of debt

In addition to cutting costs, it is also interesting to look for extra income options to supplement personal income.

Often, simply reducing expenses is not enough, because even with all possible cuts, there may still not be enough money to pay all debts.

Here are some ideas for extra income:

• Sell handmade products

• Sell things you have but no longer use (clothes, shoes, decorative objects, etc.)

• Be a reseller of products

• Give private lessons

Conclusion

Creating a plan to get out of debt is essential to having more control and financial organization.

With all these tips, it becomes easier to negotiate your debts and get rid of them once and for all!

Although this process is not easy, it is essential for you to achieve good financial balance again.