Do you find yourself struggling to eliminate debt? These days, it can seem that debt is a necessary part of life. As well as the mortgage, there are credit cards, loan repayments and never-ending bills to keep up with. And to make things worse, many of these debts come with high-interest rates and fees, as well as penalties for late payments.
At times, it can all seem like a vicious, never-ending cycle that is near impossible to get out of. But, it doesn’t have to be this way. Simple lifestyle changes, smart financial planning, and debt consolidation are all effective debt recovery solutions that can help you get out of the debt cycle, once and for all.
Here are some tips to help you eliminate your debts:
1. Create a Simple Budget
When it comes to effective debt solutions, a great place to start is with a budget. A budget will allow you to see where your money is going and help you align your spending with your income. Having clear visibility of your spending will enable you to become less reliant on loans and credit cards to cover expenses.
To create a budget, record your income and expenses on a sheet, and identify any areas where spending is an issue. It can be helpful to record all of your spendings for a month — you may be shocked to see how much is spent on items that are not completely necessary!
2. Switch to Cash Payments
Using cash for your purchases may seem very old-fashioned, but it can be a very effective way to keep track of your spending! Having to hand over cash — rather than merely tapping a card to make a purchase — can effectively control overspending. After all, it’s a lot harder to part with cash than it is to tap a machine with a card.
If you enjoy the convenience of cards, use a debit card instead. With a debit card, purchases are paid for with funds from your account, not with credit. By using a debit card, not only will you need to think twice about making a purchase, but you’ll also
eliminate the need to pay high-interest credit card repayments.
3. Look at Increasing Your Income
Even for the short term, increasing your income can be an effective strategy for helping eliminate your debts. After all, the more money you’re able to put towards your debt, the sooner you can stop it for good. Of course, this strategy will only work in your favour if the extra income is used to repay existing debt, not to add to it with further purchases.
Besides getting another job, you could look at increasing your hours (or rate of pay) at your current job, bringing in extra funds by starting an income-generating business or hobby or even selling no longer needed items from your home.
4. Create an Emergency Fund
While this may not seem a likely debt solution at first glance, having cash set aside for emergencies can save you from having to resort to credit and get further into debt if an emergency arises. Start by putting aside whatever you can afford, no matter how small. Doing this consistently over time should result in a useful fund that you can rely on as and when needed.
5. Prevent the Accumulation of Further Debt
When it comes to how to get out of debt, preventing the accumulation of further debt may seem an obvious step. However, in the struggle to stay afloat, many people resort to taking on more bad debt, such as acquiring multiple high-interest credit cards to cover the repayments on existing high-interest cards.
Unfortunately, this only compounds the vicious debt cycle and makes it even more difficult to keep up with multiple repayments, fees and interest rates. On the other hand, consolidating your debts into a single competitive rate loan can be an efficient way to get on top of your bad debts and prevent further spending on credit.
6. Consolidate Your Debts
Consolidating your debts into one loan is a smart, convenient and effective debt recovery solution, particularly when you’ve found yourself dealing with multiple, high-interest accumulating debts.
With a debt consolidation loan, all of your existing loans and debts are combined into one easy-to-manage loan, with just one set of fees, interest rates and repayments — not multiple. So, instead of needing to keep track of various fees and payment dates, you’re able to fix your efforts on eliminating your debt as a whole.
Generally speaking, a consolidated loan is ideal for combining debts such as credit cards, retail store cards, personal loans, payday loans, and even outstanding medical debts.
7. How Debt Consolidation Works
Once you’ve been approved for a debt consolidation loan, all of your existing loans will effectively be paid out and your new loan set up by your loan provider. Along with providing you with a clear repayment schedule, a good loan provider will also assist you in eliminating your debt sooner by not penalising you for repaying your loan early.
Debt consolidation can help you regain a sense of financial freedom by:
Saving you from multiple fees and high-interest rates
Affording you one simple repayment per month
Giving you a solid strategy for eliminating your debt faster
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