Five Tips for Getting Out of Debt

Debt can be the source of much stress and many a sleepless night, so it’s understandable that people want to eradicate theirs as soon as possible. No one enjoys this burden and, very often, people fall into despair and struggle to see a way out. There are, however, certain things that can be done to get on top of what you owe. Here are five helpful tips for getting out of debt fast.

List Your Debts

This may seem obvious, but it’s important that you know exactly what your debts are, how much you owe on each and what the individual interest rates are. Organisation is the first key in successfully getting on top of debt. Once you have a comprehensive list, you can then calculate how much money you have to go towards paying off what you owe. You’ll need to look at your income as well as your monthly expenses, which includes everything from groceries, electricity bills and your mortgage payments. This will reveal how much money is left over to tackle your debt with.

Prioritise Pay-Offs

When listing your debts, you’ll also want to prioritise them in order of size and importance. Working on settling your larger debts first is best, especially since they usually carry a higher interest rate. Debts with the most severe penalties should be seen to as soon as possible.

Maximise Your Income

Additional money from other sources besides your monthly salary is welcomed at the best of times; even more so when you owe creditors. Consider procuring an extra source of income, such as a job on the weekend, or freelance work. Every little bit helps and the more money you can generate that can go towards fixing your debt problems, the better. If you get a lump sum in the form of a tax return or a refund of some kind, put that towards minimising the debt as well.

Downsize and Cut Back

Even though it’s hard, get rid of anything unnecessary, such as that car that is expensive to maintain, as well as any other luxury items that you can live without. Reducing your debt is also about a change in attitude – you need to make a concerted effort to curb your spending and be more frugal with your money. Very often debt is caused by not being able to hold back and living above your means, so try where you can to spend less. It’s essentially about restraint.

Debt Management Plan

Lastly, a smart approach to dealing with debt is to speak to a professional who can assist you with drawing up a Debt Management Plan. Financial planners can be a great source of knowledge and help, but you can also go the route of debt counselling. You can learn a lot about managing your debts and finding reasonable solutions to your money problems.

Being in debt is an uncomfortable and worrisome position to be in, but there are ways to get yourself out of this predicament. Apply these tips to your situation and you’ll no doubt see an improvement in time.

 

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