Are you currently swimming in debt and don’t know how you’re ever going to pay it off? It might be worth knowing that you’re not alone. If you are looking for effective and easy ways to reduce your debts, including strategies and habits, make sure you take a moment to identify the type of debt you are facing. Whether it’s a student loan debt, credit card debt, mortgage debts, or something else, take your time to determine how much you actually have.
Understanding the amounts and the type of your loans can help you come out with a steady plan for debt payoff. Here are some of the most accessible ways to reduce and pay off personal debt.
You can always pay more than the required amount
Nobody can tell you how much you should spend but paying more than the required amount to your credit cards can get you out of this situation. If you choose only to make a minimum payment monthly, it can do more than you’ll expect in your debt situation.
That being said, there really isn’t the best way that works great for everyone, but that doesn’t mean you can try. If you want to balance your debt quickly, it means you will have to put down as much you can offer. Paying less -for instance, 2% to 3% of the balance will only prolong your debt payoff strategy. So, you can try to reinforce your obligation and pay more by making weekly and not monthly payments.
Get Frugal- Only use up what you need
Most of our needs and wishes and needs are way larger than our paychecks. In short, even if you can have everything you want, that doesn’t mean you can pay for everything you long for. People tend to fall into debt and never get out of there because they buy whenever and whatever they want. But if you’re content enough with having less, even for a short period, you should use that money to get rid of your debt. The sooner you get rid of your debt, the better you’ll adjust your new needs and properties; thus, you can rely on the money you saved up to tackle other financial urgencies.
Another sure way to get frugal is to pay with cash rather than a credit card. A study found that we used to pay much more in a restaurant when using credit cards. Those who use a credit card spend 45% more than those who pay in cash. Some studies have revealed that people tend to pay 100% more on entertainment and vending machines when using credit cards. Moreover, studies have shown that we spend up to 15% more on what we purchase when using the credit.
Pay off your expensive debt first
Sort out your credit card interest rate from the lowest to the highest then try to deal with the credit card that comes with the highest one. If you choose to use your credit with the highest rate to pay off the balance, this will maximize your fee on the credit card with the highest rate while paying less on other cards. Once you got rid of the most concerning debt, use the amount you were giving on that major debt and concentrate it on your next most concerning one. If you continue so, you will end up with your least concerning debt. This method will help you regain your financial strength; thus, you will be more confident as you follow your progress.
File a consumer proposal
A consumer proposal, also known as a legally binding debts settlement agreement, is filed with a Certified Insolvency Trustee, to repay your creditors a percentage of full debt forgiveness. In short, this will help you save a considerable amount.
If you struggle with monthly debt payments, a consumer proposal plan may provide you with debt relief while avoiding bankruptcy. How does it work? From your first meeting, an experienced trustee will examine all of your personal and financial circumstances, and decide how much you can afford to give your creditors. Leaving from this report, they will determine three elements that establish the boundaries for negotiation:
- What amount will your creditors expect to get if would file for insolvency
- What’s the minimum amount your creditor will expect
- How much you can afford to pay monthly
By discussing all these factors with an experienced trustee, they will help you work on a debt-refund plan, which is agreeable for everyone. To decide a monthly payment, you will have to negotiate between the sum your creditors are asking you to pay and the sum you afford to pay.
Don’t be afraid to seek a part-time job
A part-time job can do wonders for your debt. Of course, this won’t work for everybody, but if you can do it, this could help you get rid of debt within a few years. To make it possible, you have to utilize all of your additional income to pay your debt. Keep in mind that working extra hours or extra shifts don’t have to be an ever-lasting goal. As soon as you’ve handled your debt, you can stare back with admiration. You can also consider earning some income to escape from your debts by capitalizing on an activity that you really enjoy or some abilities you might possess. For instance, if you possess good writing skills, you should start writing articles for newspapers, blogs, or build up a freelancer website.
Bear in mind that the faster you’re looking for ways to deal with your debt, the faster you’ll get rid of those worries. The time will pass anyway, so why not start to use at least one of these strategies. If you need some help getting started, or if you’re insecure with your budget, you can always contact a credit-counselor for free to review your situation and suggest options.