Getting out of debt tips

Getting out of debt tips

1.Budget – To solve your debt crisis, you need to understand your financial affairs and see where it is possible to scale back on spending. Create a written plan, detailing which debt you will tackle first and see if you have any savings that you can rather use to pay off debt. A budget is essential to make sure that you are spending less than you earn. Developing a budget that tracks your income and your expenses is crucial to getting out of debt in a short period of time.

2.Start paying off debt with the highest interest first – Pay off the balance with the highest interest rate first such as credit card debt and store cards.Regardless of which process you choose, the key is to stick with it.

3. Ask your creditors for help – negotiate a lower interest rate, speak to your creditor and explain your situation if you have a previously good credit history they may be willing to write off the interest.

4. Seek advice from a professional– A professional will explain all of your options and let you choose the option that makes the most sense for you in your situation.

5. Use savings to pay off debt – Using cash reserves to pay off debt is a smart decision as you pay a far higher interest on debt than you receive from the bank on your savings.

6. Sell items for cash – Use the proceeds to reduce your debt. The more cash you can put towards your debt, the faster it will disappear.

7. Make more money – Look for ways to increase your income e.g. rent out a room in your house or take on a part-time job.

8. Change your habits – Your daily habits are the reason you got into debt in the first place now it’s time to scale back by going for a run rather than have a gym membership, pack lunch rather than buying it, stock up on groceries especially when there are specials on, no more financing furniture, no more signing up for credit cards, no more test driving brand new cars that you don’t have the cash to pay for. If you want to get out of debt fast, you have to stop using debt to fund your lifestyle. This will help you focus solely on the debt that you currently do have so that you can develop a game plan to pay it off quickly.