How to Get Out of Debt Fast
More than half of the population is in debt of some sort. Getting out of debt isn’t just about focusing on making your credit card debt hit a zero balance. It unfortunately involves a lifestyle change for many and you’ll need to rethink and evaluate your spending decisions.
The path towards getting out of debt is long and arduous, plus it involves many compromises on your part. Most people spend a lot more than what they earn, and credit card companies love that. In this article, we’re going to talk about a few ways you can assist yourself in getting out of debt fast.
Calculate The Amount Of Debt You Already Owe
It doesn’t matter if you are in a large amount of debt. Before paying off any debt you need to construct a concrete debt repayment plan and not fall into the credit card trap.
Many credit card companies delude you by making you think that by paying the minimum payment on your debt, you’re paying off your debts. The reality is far different, by paying the minimum amount, you are actually digging a deeper hole for yourself.
A clever way to document your debts is by using an excel spreadsheet. You can use the sheet to record how much you owe and to what company and use that to draft out an effective repayment strategy according to your needs.
Your credit card companies will even help you with this. Call the number on the back of your card and ask them about the details of your debt. Talking to your credit card company will help you know how much you owe, the APR, and the monthly minimum payment on the card.
Freeze Your Credit Card
As hard as it may sound, you will have to stay clear of adding any additional debt once you’ve decided on a repayment plan. Not only will it ruin your calculations, but it will also make it harder to repay your debt.
Realistic expenditure budgeting will help you achieve this. Try cutting down on your shopping expenses and cook your meals instead of ordering in. For a few months, you will have to control your costs to be able to become completely debt-free.
Another good tip to control your spending is to try and keep your credit card out of reach, so that by the time you’re able to access it you don’t want/need to make the purchase anymore. You could ask a family member or a friend to hold it for you.
Prioritize Your Debts
Once you’ve worked out the actual figure of your debts and how much you exactly owe, you can now prioritise which debt you would want to pay off first. Whether that it is your student loan or the long overdue holiday loan, that’s up to you.
Can’t meet your monthly repayments? The smart route to take is by paying off the loan with the highest interest rate first. This way will help you get out of debt the quickest. After which, you can then move towards paying the next debt with the higher interest rate.
With loans like student loans, you can end up saving thousands of pounds by paying off some of the debt along with the minimum payment.
Suppose you have two credit cards, both at different interest rates. A smart decision to take would be to designate a certain amount of your wage to credit debt payments. Then use the amount to pay off the debt of the credit card with a higher interest rate and pay the minimum amount for the second credit card.
If you’re familiar with excel, you can use the spreadsheet to forecast your payments and create multiple scenarios to select the best ones. Forecasting also reveals how much you can end up saving (for instance) by paying a hundred pounds extra before it’s time to make a repayment.
Get External Help From Friends And Family
Many people are reluctant to get professional help with their debts. However, this is the best time to ask your friends and family for support and gain their valuable personal experiences and insights.
If there’s anyone in the family who is good with financing, he/she can be a massive help to you and will assist you with a comprehensive, robust and realistic repayment plan.
That family member might also be an excellent negotiator and could even drive the interest rates down for you over a simple phone call with your bank.
You can also consult a non-profit debt advice agency to guide you on how to get out of debt. Debt relief can be a long process and typically takes around 3-5 years, depending on the amount of debt you’ve acquired.
Remember that while you might want to pay your debt as soon as possible, it might not be the best idea to the devote all your money to debt repayments and keeping nothing aside for emergency like situations.
Get A Part-Time Job
You can freelance to earn some extra money which can add to help you in repaying your debts much sooner. Limit how much you can spend, but don’t limit how much you can earn.
A couple of extra hundred pounds a month will help you immensely in the long run. The ways through which you can earn this are endless; you can do odd jobs in your free time. You could even negotiate a raise with your employer, or start an online business for a skill you have.
Earning more money is the weapon you need for paying off your debt as fast as possible. Instead of spending your free time online shopping, you can utilise this time to start earning more money. It’s up to you to push yourself to get out of your financial situation.
Having the right mindset and working hard will (over time) eliminate the financial worries you have.