The thing about debt is that it is much easier to acquire than to get rid of. If you feel the pressure of your credits and loans growing, here are a few tips to help you manage and pay off your debt as quickly as possible. With the help of these useful steps, it may be a lot more attainable than you think.
Make a Comprehensive List
It’s always useful to have the facts and figures together in an organised, accessible list or spreadsheet. Once it’s all in front of you, your debt may seem much less overwhelming. Include all the important details, such as the name of the creditor, interest rate, balance, and minimum monthly payment, as well as the monthly payment needed to pay off the debt within three years. Remember to include the expenses not listed on your credit report, such as family loans and medical bills. This will ensure that you are seeing the full picture and planning accordingly.
2. Stop Accumulating Debt
Nobody likes to hear it, but if you’re worried about dealing with your debt, the last thing you want to do is acquire more of it. This alone won’t pay off your debts, but it will prevent the problem from escalating, which will definitely help. In order to reduce your likelihood of acquiring unnecessary debt, you may want to consider freezing your credit, for example.
3. Lower Your Rates
You might be paying higher interest rates on your credit than necessary. In order to fix this, there are a few things you can do. Contact your credit card issuer to see if they will lower your interest rate, or find out what you need to do to qualify. A balance transfer might also be a good option, as you may be able to move your balance to a lower interest rate credit card. However, beware of transfer fees and introductory low rates that are only temporary. Another option is to find ways of improving your credit rating so that you will qualify for lower rates.
4. Increase Your Monthly Payment
Generally, you will be paying more overall the longer you take to pay off your debt. Though it may be more difficult in the short term, increasing your monthly payments could save you a lot of money. Avoid doubling and even tripling your expenses by avoiding the high interest rates that come with minimum monthly payments.
5. Prioritize Your Debts
While increasing all your monthly payments by a fraction will help you make progress, singling out a priority might be a more efficient way of dealing with your debt. Consider making large payments on one of your accounts while meeting the minimum on the rest until it is paid off. Then do so with the next highest priority, and so on. You may make more noticeable progress this way, and it will be especially satisfying to tick them off one by one.
6. Create an Emergency Fund
It may seem counterintuitive to set money aside when you could be using it to pay your debt. If at all possible, building up an emergency fund can help you immensely now and in the future. It will encourage you to save rather than exacerbating your debt, and provide security for a rainy day that you might otherwise use a credit card for. Ideally, an emergency fund should cover six to twelve months of living expenses, but have a look at your budget and aim for a realistic figure in the short term.
7. Put More Money Towards Your Debt
This may sound obvious, but if you’re serious about addressing your debt problem you may need to reconsider all your expenses to suit your plan. If you haven’t already, sit down and plan your monthly budget in order to cut expenses wherever possible. Additionally, you may be able to generate some extra income by selling things from your home or taking up a paid hobby. Find out how to make money online and put everything you bring in straight onto your debt
8. Stay on Top of Your Taxes
Track your expenses in order to minimise your tax liability. Every little helps, and you may be able to claim more deductions than you expect. It’s always a good idea to have a complete picture of your finances. After all, whatever you aren’t paying in taxes can go to good use, like minimising your debt.
9. Settle With Creditors
If your accounts are past due or you owe more money than you can repay over the next few years, debt settlement is a good option. Settling with your creditor means asking them to accept a single lump-sum payment to cancel the debt. These offers are typically only accepted on accounts that are in default or at risk of defaulting.
10. Consult an Expert
You may want to consider talking to a credit counsellor. These will assist you in creating a plan, take care of the paperwork, and negotiate with your creditors on your behalf. In other words, you can pay an experienced professional to take care of things for you and help you settle your debts as efficiently as possible. You may find that the fees are worth it if you’re feeling overwhelmed.