Nobody likes being in debt and it can be a quite stressful experience. If you have signed a loan then, no matter happens, you have to repay it. Many people try their best to get out of debt but they are not aware of strategies or ways that can prove handy. So, the following strategies will surely help you enjoy financial freedom that you always dreamt of –
No more debt
This is the first step you should consider, this alone won’t help you in getting out of debt but it will stop your debt from getting any worse. While you are paying off your debt and going good, adding more debt will surely hamper your progress. Avoid being tempted to have more debt by freezing your credit.
Boost your monthly payments
In order to see yourself out of the debt, paying the only minimum on your debts won’t do you any good. By the time you have fully paid off your balance, you have most likely paid the double or even triple of what you originally charged. You should choose to make minimum payments on your credit cards when, as per your debt-repayment plan, you need to make a significant payment on your credit card.
Ask for a lower interest rate
If you have higher interest rates, you stay in debt for a longer duration as the major amount is going towards the month interest charge and not towards your actual balance. You can ask your lender to lower down the interest rate. Often the customers having good payment history can easily negotiate lower rates. If you have decided to go for a balance transfer in order to have a lower rate, make sure you have paid your balance before the promotional rate expires.
Prepare a list
When you get everything in a written form, it really helps you in your objective of getting rid of the debt. When you have everything in a written form, you know what you need to do and it also helps you to frame a blueprint of how to go about. Here are the things that should be there on your list –
- First and foremost, include all your debts, about minimum monthly payments, the name of the creditors, balance, and the interest rate
- Secondly, as found on the credit card statements, make sure you list the three-year payment for all your debts
- Thirdly, make sure you have included, in your list, all the loans listed on your credit reports such as medical bills and family loans
Try Snowball Method
It is one of the popular and efficient methods of becoming debt-free. Starting off with this option, your first step would be to align all your debts from the smallest to the largest. Once you have aligned all your debts, your next step would be to set up a budget helping you to make the minimum payments on your debt except the smallest one. For the smallest loan balance, you will pay whatever it takes to get rid of it.
As each small balance gets paid off, move down the list and use all the extra funds to pay off the smallest balance and make the minimum payments for the rest. This will help you get to rid of the small balances completely and you will only be left with the largest balances. As there will be no forced payments on the small balances, you will be in a better position to increase your payments against your remaining, larger loans and paying them off quickly.
It does not matter what the plan is, when you use the above-discussed strategies, you will be able to pay off your debts much faster.
This is a guest post from Adam Smith. He is a content writing professional at debtpro.co, an inbound marketing and sales platform that helps companies attract visitors, convert leads, and close customers. Previously, Adam worked as a marketing manager for a tech software startup. He graduated with honours from California University with a dual degree in Business Administration and Creative Writing.