Six Tips to Get out of Debt
No matter what your financial position may be, saving money and staying out of debt is always a good thing. But it becomes all the more important if you are reeling under the burden of debt. Debt may be incurred for many reasons, including job loss, a major health problem or any unexpected emergency. Whatever the reason, make paying off your debt a priority. Following these six tips can help you make dent in your debt burden.
1. Acquire No New Debt – Make a commitment to yourself that you will not add to your debt or look for new credit cards. Instead, channel all your resources towards becoming debt free. If you have any extra money, pay it toward your debt, and try to repay your loan faster. If you owe a huge amount on your credit card, the first thing you need to do is stop using your card, and, if possible, cut it off completely. The amount of interest you likely pay on the credit card is anywhere between 25% – 40% APR. You can definitely do without this mounting debt.
2. Prioritize Your Debts and Budget– Prioritize your outstanding debts as ‘urgent,’ ‘not so urgent’ and ‘can wait.’ The loans with higher interest rates should be paid first, and so on. Direct any extra money toward repaying your most urgent loans. To begin, write down all your bills, credit card statements, details of your income and any other money that you receive. Make a budget and spend according to that. Begin tracking your money.
3. Try to Negotiate Better Interest Rates and Payment Terms with Creditors- Once you know how much your total debt amounts to and how much you need to pay out each month, reorganize you expenses. Reducing your interest rates is one way to fast track your way out of debt. If you are paying a mortgage, find out if you can refinance and take advantage of a lower interest rate. Move your credit card balance to a card that is offering a lower or 0% interest rate on balance transfers for a limited period of time. If it is not possible to move your debt, try renegotiating terms with your credit card or loan company. If you don’t ask, you don’t get!
4. Bring in the Extra Bucks – Do anything you can to supplement your income. Consider overtime at work, taking on a part time job or using any skill that you have to bring in extra money. Use that money to repay your loans. Make small compromises like eating out less, eating more at home and stopping unnecessary spending.
5. Don’t Hesitate to Ask for Help – When you are battling debt, be open to talking about it with family and friends. If they offer to help, accept. Ask your friends or family for a loan at low interest or zero interest, it will really help.
6. Get Help from a Debt Management Company – If all else fails and you still feel burdened with debt, get professional help. There are many non profit debt management companies who can help you. They provide customized and easy to follow debt management solutions that enable you to consolidate your monthly payments into one, reduce your interest rates, waive some or all late fees and pay off your debt with ease and within a reasonable time frame.
Start on the road to debt free living today – take control of your finances!
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