Not every debt is a bad thing. For example, a home loan to move to your dream home, or even a student loan to get that degree are good debts because they are associated with a purpose.
But there are some debts that can jeopardise your financial freedom. However, as we go further into the new year, there are many sure-fire ways to get out of these kinds of debts quickly.
If you’re interested, keep reading!
Find out how much you owe
Make a list of your debts, including your creditor, total debt, monthly repayment and payment deadline. You can use a credit report to confirm your debt on the list. When you have all your debts in front of you, you have a general overview and be clear about the overall picture of it.
It is important though that you don’t just make a list and forget about it. You should check your debt list regularly, especially when paying bills. Update the list every few months when the amount of debt changes.
Consolidate your debts
One of the most effective ways to pay off your debt is to combine all your debts (credit cards, bills, high-interest loans, etc.) so that all your debt is in one place and you can quickly pay it back in monthly instalments.
To do this, you must have sufficient credit for the loan company to offer a low-interest rate, which can also determine how many loans it will give.
Debt consolidation may not be ideal for everybody, and you must have a clear picture of what you are going in for before committing yourself to this system. A good idea is to check your new loan obligation using a loan calculator to be sure you will be able to make your monthly repayments, meet your interest, and not get further into debt.
Create a payment plan
Create a system or schedule so that you pay out some part of your debt every month, or as often as the paycheck comes in.
You can use a bill payment calendar to find out which bills and pay-outs to pay. Enter the payment amount for each invoice next to the due date on your schedule. Then enter the date of each withdrawal.
If you get paid on the same days every month, you can use the same calendar from month to month. However, if your payslips fall on different days of the month, it can help to create a new calendar for each month.
Reduce your expenses
If you really want to pay off your debt faster, you need to limit your expenses as much as possible. There are many different ways how you can save money in your lifestyle.
One of the tools you can use to decide on how to cut back money is to create a budget. Thanks to this strategy, you can keep your expenses as low as possible and live as little as possible for as long as possible.
A tight budget will look different for everyone but should not include “extras” such as dining room, cable TV or unnecessary expenses. With a tight budget, you should be able to pay off much more of your debts.
When you run out of debt – or much closer to your goal – you can start adding discretionary expenses to your monthly plan.
Get a side business
Finally, while many people may not want to hear this, cutting back on spending will definitely help you free up your money, but finding another source of income has always worked for many when it comes to paying off debts early.
Really great part-time work does not require much commitment and can bring you a lot of money if you do it consistently. Here are some ideas on jobs that can bring you in extra money.
With all these hints, you will be more likely to get out of your debt quickly.