Getting into debt is easy. Bills can pile up from growing student loan payments to credit card spending that quickly gets out of control. Before you know it, you're making minimum payments to get by, or worse, missing a few. Paying down a large debt load may seem overwhelming, even if you have loans for bad credit. Break free from the burden of debt and reshape your financial future. Here's how. 

Know Exactly Where You Stand

It's essential to get an accurate snapshot of your finances. The best way to do that is by obtaining a consumer credit report. It will give you a bird's-eye view of:

  • Past and current credit card accounts.
  • Delinquent accounts or charge-offs.
  • Payment history.
  • Credit limits and available credit.
  • Previous employers and addresses.

Make sure all information is correct. False or incorrect data should be reported to all credit agencies, including TransUnion, Equifax, and Experian. 

Obtain a credit or FICO score at the same time. The higher the number, the better your score and ability to obtain a loan. If you have bad credit and a low FICO score, focus on raising it above 580. Paying down credit cards, loans, and collections helps boost your score. Paying bills on time and not extending credit limits also helps. 

Know your credit score before applying for bad credit loans so you have a clear snapshot of your loan options. 

Create a Budget (and Stick To It) 

Get out of debt by creating a monthly budget. Map out your monthly net income. From there, make a list of all of your bills and expenses. Set aside an amount each pay period for paying all monthly bills and credit obligations.

One easy way is to use the 50/30/20 method. Fifty percent of your net income should go to basic needs like electricity, house payments, and a car note. Thirty percent typically should go toward wants, like a date night or a vacation, but if you have debt, use that 30 percent to pay it down. The remaining 20 percent should be directed toward savings or to tackle your existing debt load. Pay all your bills on time, and pay down any past-due amounts when you have extra. 

Eliminate Extra Spending

Even with a rocky credit history, you must keep the cash flow moving. That is why personal loans for bad credit can save the day! But, to break free from the cycle of debt, you need to curb poor spending habits. Try to make some changes, including:

  • Ditch cable and use streaming services instead. 
  • Limit eating out and cook meals at home. 
  • Choose a staycation versus a trip to an amusement park. 
  • Take on a side gig or hustle to earn extra cash.

Implementing one or more tips can reduce spending and make your debt load more manageable. 

Tackle Debt Head-on

The simplest way to eliminate debt is to start paying it off now. Using the debt snowball method, you tackle the smallest debt first. Being able to pay off that small amount gives you the incentive to keep going. Keep moving on to the next one until everything is paid off. 

Debt can quickly pile up, but it doesn't have to control your life. There are several ways to gain control over it, and it starts by taking small steps. With diligence and hard work, you can boost your credit score and regain your buying power again!