One can find innumerable cases of debts in today’s economic condition. Many people don’t handle their finances well and take too many loans and face large debt which they fail to pay. You can easily get into debt but cannot get out of debt easily and quickly. However, it is really important that you keep your debts under control and work towards getting out of it.
Some tips to get out of debt:
1. Find out what you really owe and what you are paying.
There are many situations when a person are not even aware of the amount of debt they have on themselves, the way they are making the payments and the current status of the debts. There might be a situation where the total debt amount is around $10000 but the amount of debts are 30. In such a situation it becomes really difficult to manage the repayments. With multiple loans comes separate due dates, interest rates, tenure and the different penalties and fees applicable to them. Most people cannot keep a track of the multiple debts. They end up delaying the payments and even missing on the payments on the loans. This results in a poor credit score. First you should sit down, prepare a list of debts and their amounts and then make a plan as to how you will clear all these debts. It is good to start with the lowest debt to the highest one and pay off each one of them slowly. Take out each debt and try to clear them by making large payments toward it by which you will lower down the debt amount as well as the number of debts will be lowered fast.
2. Set some attainable goals
When you are prepared with the list of debt amount and the number of debts then start planning that how will you approach to these debts and pay them off. You should make a full proof plan after looking at your income status and try to make big payments toward your debts. It will be good to clear your debts in one time rather than paying toward the minimum balances as they are not going to bring down your debt amount. Try to clear of the least debt and then move to the high ones.
3. Stop buying things with credit cards
Once you get to know that your credit card bills are way above your repayment capacity then you should not use your credit cards any further as they will only increase your debts. Stop using your credit cards until you clear all your pre-existing debts. It is best to think before you spend money and assess by yourself whether it is necessary to spend your money or you can utilize this money to clear your debts. It is better to use your cash rather than using your credit cards which will help you not to increase your debts.
4. Transfer your balance to a low rate card
Some people take another installment loan or consolidate their loans to pay off their debts which ultimately increases the amount which you have to pay toward the new loan you took to settle down your debts. It is better to transfer your balance amount which will result in low interest rate or zero interest rate which reduces your debt very fast.
5. Overhaul your budget
You can make a proper budget of your expenses to pay off your debts. You can lower down your unnecessary expenses and cut down some expenses of your utilities and can save good amount of money to lower down your debt amount.
To save some money you have to make your budget in which you have to take out things which is not necessary and find ways to buy your utilities on low cost. You can shop for groceries where you can get it in lesser cost. You can start taking lunch to the office instead of spending money in the cafeteria. You can save petrol expenses by travelling on public transport.
You can even work from home for additional income and use it in paying your debt amount.
6. Keep the basics of the plan in mind:
Make a plan of all your debt and expenses and then plan your income in such a way that you can pay off your debt and incur your basic expenses. Don’t use your credit card so that you don’t increase your debt.