If you are in debt, finding the right debt management strategy is essential. Often, people in debt already have the resources they need to dig themselves out. It’s simply a matter of reassessing their finances and restructuring their income allocation. Accurately identifying the scope of your debt and what resources you already have will be the first step toward financial freedom. If you are still feeling lost, you may be looking to get some input from the experts. Here we will detail how accountants can help manage your debt.
Assessing Your Financial Situation
Gaining an understanding of where your finances are is a critical first step to avoiding a financial crisis. Leave no stone unturned when fleshing out your options. For example: find expenses to reduce or eliminate. Do you really need all those streaming services?
Also, consider ways to increase your income. You might want to look into starting a side hustle. Digging into your finances in this way will lay the foundation for your new financial plan.
If most of your expenses are going towards existing debt, you should create the most effective payment plan. A debt snowball spreadsheet can help you do this. A debt snowball spreadsheet is a tool to pay off your debts in order. It can help you save money, stay organize, and see your debts disappear over time.
Consolidating Your Debt
Another way to simplify your situation is to consolidate your debts. You might be paying off multiple credit cards with high interest rates. You may also be dealing with secured loans where your home or car stand as collateral for repayment. Personal loans are unsecured and typically have relatively low interest rates. Once approved for a personal loan, you can use that money to pay off your various debt accounts. This will consolidate your debt into one, low-interest loan. This will be much easier to manage.
Working with an Accountant
You may be wondering how accountants can help manage your debt. Well there are many tools they have access to, plus a ton of education and training to help.
A recent survey conducted by Debt.com showed that as of 2021, the number of Americans who budget their income is at an all-time high of 80%. In years past, however, that number has been much lower. Maintaining a budget is essential to getting your finances under control. If you don’t know where to begin, find a local CPA or accountant.
In the meantime, make a list of current expenses and income. It’s a good idea to look at bank and credit card statements for accurate figures. Be honest with yourself and be sure to account for your debts and minimum payments. An accountant performs a wide variety of finance-related assistance and analysis, including consulting services, tax preparation and planning, financial planning and more. As an individual seeking help with debt management, financial planning should be at the top of your list.
What’s the Difference Between a CPA and an Accountant?
If you are wondering how accountants can help manage your debt, you should be sure you know the difference between a CPA and an accountant. A CPA is a Certified Public Accountant that has been licensed by the state. They must maintain the required continuing education for their license. Not all accountants are CPAs, but all CPAs are accountants. Whether you hire a CPA or accountant is entirely your choice.
The Importance of Managing Your Debt Now
Having debt hanging over your head can be a major source of stress and anxiety. This can have a significant negative impact on your personal health and relationships.
Debt can create doubt about your future and insecurity for yourself or your dependents. It can feel as though you’re trapped in a never-ending downward spiral. It’s never too late to get your finances under control and begin working your debt back down to zero. It will take patience and discipline, but the resources you need to turn your life around are right at your fingertips.