It’s stressful to discover you’re drowning in debt. It’s understandable to feel overwhelmed by accumulating interest on a large balance, but know that paying off your debt is achievable; it may just take some time. Read below on how to get out of debt.
While there are times when taking on debt is unavoidable (e.g., when purchasing a car or a house), it is essential to address the other debt that is causing stress. The key is to tackle debt repayment methodically, itemising what you owe, identifying sources of additional income to go towards debt repayment, and taking precautions to prevent further accumulation of debt. Here are five tried-and-true strategies for eliminating debt once and for all.
Calculate the Monthly Amount You Can Afford
Maintaining a positive payment history by always paying the bare minimum on your bills means spending more money on interest over the long run. The faster you can pay off your debt, the more you should try to pay each month over the minimum.
Lessen Your Rates of Interest
When dealing with high interest rates, it might be difficult to make progress towards paying off debt. The process of paying off debt can be made more manageable and affordable by negotiating a lower interest rate.
Make a plan to pay off your debts.
Identifying which outstanding sums to pay off first requires careful planning. Mortgages are notoriously difficult to pay off quickly; prioritising payments on other, more manageable debts, including credit cards and personal loans, is a better strategy.
When you eliminate one loan, put that money towards eliminating the rest of your debt. You can use any windfall you receive, such a tax return or a bonus cheque from your employer, to accelerate your debt repayment.
Take Care Going Forward
It’s not easy to get out of debt. Reward your efforts and acknowledge your accomplishments as you make headway in settling your debts.
Make a pact with yourself not to incur any additional debt until absolutely necessary. If you want to consolidate credit card debt using a personal loan or a balance transfer card, you should proceed with caution. Avoid consolidating your debt if you aren’t confident in your ability to refrain from using the cards you’ve just paid off.
Eliminating high-interest debt is crucial to long-term fiscal stability. Setting up a budget, using a debt repayment strategy, and consolidating debts are all things you may do on your own to gain financial control. Credit counsellors are available to provide individualised assistance for anyone who feel they need it.