More and more people are incurring debt, especially after the virus pandemic has taken a toll on the rest of the world. Because of this, many individuals are forced to confront their circumstances and tackle their debts one at a time.
For many people, living a debt-free life is truly one of the best ways to attain financial freedom. Not only does this pave the way for better control of their lives, but it also helps them take better control of their future.
Getting out of debt is a struggle for most people. However, with these finance tips and habits, you can easily jumpstart your way out of your crippling debt and work your way to a better tomorrow. Take a look at some of these tactics.
Getting Out of Debt
Working hard and smart is the way to go to help get out of the sand. With the right strategies in tow, you can pay for your debts faster and more efficiently, all while giving you some space to breathe.
If you’re interested in making smarter financial decisions, below are methods you might want to consider.
Stop Incurring More Debt
They say the first step is the hardest, but this strategy is perhaps the easiest thing you can do: stop digging your grave and creating more debt.
While this won’t necessarily help you alleviate some of your existing financial woes, it will certainly stop adding expenses and debt on your list.
To do this, stop using your credit cards or have your credit freeze. Likewise, make sure not to enlist for additional loans. Another way you can keep at is by evaluating your expenses.
Veering away from temptations and limiting your spending, such as lessening your coffee buys from the nearby Starbucks or even eating out every day, can already make a huge change in your finances.
Pay More Than the Minimum Required Amount
While making small payments appear more manageable, these actually prolong your debts. Plus, doing this helps pile up the interest, thereby affecting the overall timeline for your repayment plan.
After all, the remaining balance incurs interest charges at the end of the month. To avoid this, you may want to start increasing your monthly payment.
If you can, you might want to pay off the whole monthly balance to prevent incurring more interest. Doing so will save you both on interest as well as fast track your payment process.
It’s easy to get overwhelmed with finances, especially when you have to budget for your everyday necessities as well. To help get the ball rolling, you can start paying off smaller amounts in full while still making minimum repayments on larger ones.
Called the debt snowball method, you’ll be paying off your smaller debts the easiest, paying these one-by-one while still tackling larger obstacles. As these smaller debts are paid, you’ll be free to allocate and ‘snowball’ most of your budget towards bigger debts and loans.
Revert to a Lower Interest Rate
High-interest rates make it harder for you to pay your dues (and more). To cut your current interest rate and get a much lower rate, ask your creditor for a lower interest rate – as simple as that.
You can ask for a preferable rate for the meantime or for the rest of your plan. This is a common practice in the industry, and if you have a good track record of paying on time, chances are you’ll be granted your wish in no time.
The worse that can happen is your creditor or billers saying no, which means you can consider a balance transfer or debt consolidation approach.
Start an Emergency Fund
Find other ways to supplement your current income. If you’re working a 9-5 job that merely pays the bills and your debt, taking up a side hustle can do the trick.
This way, the income coming from your part-time job can pay for bills and cover your debt. Some of the side hustles you can do while working from home are writing, typing jobs, being a virtual assistant, graphic design, etc.
The Bottom Line
If getting out of debt is a priority, make sure to jumpstart your financial journey by trying the strategies mentioned above. In no time, you can pay most of your debt and live a financially secure life.