It is quite easy to fall into a pattern of spending, without realizing that your debt is getting out of control. Using credit cards for payments, making late payments for your loans can all lead you to a life of debt. There are many kinds of debts such as student loans, credit card bills, mortgages, medical bills, business debt or even personal loans. No matter what kind of debt you are in, it can take you decades to get out of such a situation. It is not easy to figure out how to handle your debt, especially if you’re falling behind on your monthly payments. Falling behind in dealing with your debt has severe consequences and paying it off can be filled with a lot of hard work. Fortunately for all of us, there are a few tried and tested strategies that can help you get out of debt faster.
The strategic use of debt consolidation loans
Not a lot of people know that they have the possibility of taking out a new loan for the sole purpose of debt consolidation. These loans are usually fixed-rate loans that offer a significantly lower APR than others such as credit cards or short-term loans. Such loans require a reasonable credit score, allowing you to pay off all other debts with the money obtained from this loan. It is much easier to handle paying one monthly payment rather than paying three or four once a month. You can click here to learn about debt consolidation and how it can benefit you in the long run. These loans can even provide a boost to your credit score by helping you make payments on time.
Pay off more than your minimum payment for each debt
An average credit card payment will include a typical 15% APR, which can take a long time to pay back. No matter what kind of debt you are carrying, be it personal loans, student loans or credit card debt, one of the best ways to pay them off early is to actually make more than the minimum monthly payment. This will assist you in saving interest on each of these loans throughout the life of your loan. This will not only speed up your repayments but also get you out of debt faster. You can even use some free online debt repayment tools such as Unbury.Me in order to help you track your progress.
Pick up extra work
Having some extra income every month can help you pay off your debt much faster. It is a hard route but it can amplify your efforts quite a lot. Almost all of us have at least one skill that you can use for some extra cash, even babysitting and mowing lawns can help you earn a small amount. It’s easy to find a way to earn money part-time sitting at home with sites such as Upwork.com. The key is to budget strategically so that you use this extra money to pay off your loans.
Optimize your budget and consider living with a bare-bones budget
It is of the utmost importance to consider cutting down on your expenses as much as you can. A tool that can help you accomplish this is a bare-bones budget. This strategy helps you cut down all your expenses as low as you can and live on the bare minimum for as long as possible. This includes cutting out every “extra” in your expenditure such as cable television, going out to eat or even unnecessary shopping. This will help you save more in order to pay off your debts. This strategy is only temporary in order to help you catch up with your payments. Once you are closer to your goal, you can slowly start spending more money.
Keep a garage sale
You can sell off everything that you do not need in order to earn some cash quickly. A lot of us have things lying around the house that we never even use and that can be sold off for a handsome amount. A good old-fashioned garage sale may be just the strategy you need. This is one of the cheapest ways to sell off your extra stuff and make a good amount of profit.
Negotiate the interest rates on your credit cards and other bills
If you feel that the only reason you’re drowning in credit card debt is the high interest rate, it might be a good idea to call your card issuer and negotiate. If you have a good record of paying your bills on time, you might even get a much more reasonable interest rate.
Cut down on your expensive habits
If you have trouble dealing with your monthly expenses and are always struggling to make payments, maybe you should consider evaluating your lifestyle and habits. It makes sense to introspect on where you spend money daily. It helps you evaluate what purchases are essential and which ones can be dropped. A study revealed that most Americans spend around $2,292 per year on cigarettes. Quitting will help you save quite a lot of money which can go towards paying off your debts. Small things such as making coffee at home rather than spending money in a café every day can help you save a ton of money in the long run.
Pay off balances with ‘found money’
‘Found money’ can be in the form of an annual raise, some inheritance or even a bonus at work. Using these to repay debts can help you reach the goal of becoming debt-free much faster. You can use them to either pay off your smallest loans so that you only have to make fewer monthly payments, or even use this money for early repayments of big loans so that your interest for it decreases significantly.
Financial management can seem easy to plan but the execution is the hard part. Make sure you are updated on the various ways that are available to help you with financial management. Go through the aforementioned points to get some clarity and insight into this issue.
