For some people getting into debt is a slow and steady process whereas for others some unfortunate events get them there like a sudden job loss or serious illness. Whatever the reason is getting into debt is equally bad, that is the time where you realize how precious money is. If you are in debt crisis you need to keep in mind one thing; the sacrifices may look great but they will all be worth it in the end. You can get trapped in credit card debt, car loans, student loan debt or any other. Paying off debts can take years or even decades! So patience is the key. Fortunately, there are some rules discussed below that if followed may help you get rid of debt fast.
In order to get rid of debt fast it will be really beneficial if you pay more than the minimum amount. This will have two major benefits, Firstly, you will be able to pay off the money owed quickly and secondly, you will also save on interest payments.
The snowball method starts with you listing down all the debts that are to be paid. Then you pay off all your smallest debts, since they are easy to pay and have a psychological effect of making you feel better. In order to keep the momentum you pay one debt and then shift to another. Over time, all your smaller balances will be cleared that means more money available to shift towards larger debts. Ultimately, all your debts will be paid.
Another way to pay off debt fast is to somehow increase your income level. You can either opt for overtime work or part time jobs. Generally everyone has a talent that can earn them some amount of money.
If you weren’t doing it before then now is the time to realize the importance of creating and following a budget. It is what makes you in control and helps to keep track of money. Create a monthly budget and then stick to it so that you can manage some amount of money for your debts as well. Moreover, it’s time to cut down your expenses, look for cheap alternates for stuff that you buy and all together stop purchasing all those luxury items that you can live without. Keeping budget and reducing expenses always helps you whether you’re in debt or not, hence the sooner you adopt this habit the sooner your financial position will improve.
In case of higher interest rates it really is difficult to paying off debts. But negotiating can help you can always ask your creditors to lower the interest rates. This can help both the sides, you will have to pay lower amount while the creditor has increased their chances of early payment. So don’t hesitate from negotiating it can always help and the worse that can happen is that they might say no.
Balance transfer means you can transfer all your bank account balance into a newly opened bank account that offers zero APR as an introductory offer. The benefit is quite visible you’ll have to pay lower amount of interest rate. This leads to more amount of money being left over that can be used in paying off debts.
The biggest advantage of credit cards that is to consume now but pay later is actually the biggest disadvantage as well. All the money that has to be paid later if not properly managed keeps on accumulating and gets you further into debt. Therefore, while you’re recovering from debt make sure you are staying away from credit cards as much as you can.
The money that you receive through inheritance, gifts or any other way can be used to pay off your debts.
Since you are going through so much to pay off your debts, self care I crucial. So whenever, you pay off a debt reward yourself but not in a really expensive manner! The idea behind this is to keep yourself motivated and knowing that debt is a really common issue so you should not lose confidence in yourself.
In extreme cases if all these steps even don’t work out and you’re going deeper into the trap, then debt consolidation or debt refinancing might help. Financial advisors can also be of great help you can come up with a solution best suited to your situation.
