Debt often makes you anxious and stressed. And when a human gets stressed, they make more wrong decisions, eventually leading to more debt. If you are in this situation, calm down and read this article. It contains 8 pro tips to help you find your way out of this vicious circle.
1. Acknowledge your situation
People who are in debt don’t always accept their condition. Instead, they avoid it for as long as possible. And this denial may give them some temporary peace, but in the long run, it will create problems.
So, the first step to dealing with debt is to acknowledge it. Then, take all your bills and calculate how much money is due. Then, make sure to include all your credit card payments as well.
If the total exceeds your income, you need to change your lifestyle. Start by shifting to a more economical flat, cut down on your daily expenses, and visit the bars less often – and this way, take small steps to a debt-free life.
2. Pay your debt timely
Time is money – that’s undeniably true, especially if you have a debt to repay. So, pay the interest rate at the due date because if you delay it, the interest rate will accumulate and start compounding.
Timely payment will significantly reduce the debt burden, and your credit score will not suffer any harm.
3. Take debt negotiation services
This one is the most effective way of getting out of debt. Debt Negotiation companies negotiate with the organization on behalf of the client to reduce/waive their debt, reach credit card settlements, or come to an informal debt arrangement.
Recently, one of my friends was near bankruptcy due to her lifestyle. She availed services from Credit Mediation debt negotiation. As a result, they were able to reduce her debt from $10,000 to $1000. Now, she pays her dues on time and maintains a good credit score.
4. Target the high-interest debt first
Compare all your debts, mark the one with the highest interest and repay it on priority. Then go for the non-deductible low-interest debt. In the end, pay the tax-deductible debt.
Other than that, keep only one credit card for emergencies and lock away the rest of it. Maintain an emergency fund and use cash for all your purchases.
These tips will help you cut off so many extra expenses and achieve a debt-free life ASAP!
5. Consolidate every loan under one big loan
When you have more than three loans, it becomes difficult to manage all of them from time to time. Hence, consolidation is required. Ask your lender to transfer all your loans under one big loan.
This way, the existing multiple loan windows will be closed, but you will have to pay a larger amount of EMI. If possible, try transferring the loans from higher interest to lower one.
6. Create a budget and stick to it
If you’re bad with financial planning, create a budget at the beginning of the month and stick to it until the debt is repaid. Then, take some time off from your job and start calculating your monthly expenditure. This includes the food cost, essential bills like water and electricity, transportation costs, etc.
7. Liquidate assets to settle the debt
If you have any assets that you can sell to clear the debt, do it as soon as possible. But before taking this step, first, analyze the urgency of the situation. For a wise decision, it’s best to discuss this with an expert.
8. Switch to home-cooked meals
If you don’t have a free meal facility in your office, cook food for yourself. Or, if you are a coffee lover, make your coffee at your home instead of purchasing one from a nearby coffee shop. This tip is extremely underrated but can save you a lot of money in the long run.
Over to you…
Now that you know all the tips, it’s time for some action. It may feel extremely difficult, but remember, it is only temporary. If possible, get a part-time job to make some extra money, and you will soon find yourself debt-free!