Getting into the debt trap can be very easy, but getting out of it is just as difficult. However, with the right tools and motivation, you can handle your debts efficiently and even free yourself within a short span of time. Here are a few strategies you can try if you are ready to go on your debt payoff journey:
Build a budget and stick to it
Building a budget becomes crucial when it comes to paying off your debts. A 50/30/20 budget would be ideal in this case. In this budget, your essential expenses such as housing and bills should be ideally covered by 50 percent of your income. You can then allocate 30 percent of your income to your wants. Nevertheless, 20 percent of your income has to be used for savings and debt pay-down. If you want to pay off our debt early, you can use money from your wants category as well. Once your budget is ready you need to start tracking your process. Automate it as much as possible and revise whenever necessary.
Try and earn some extra cash
Extra income can always come in handy when it comes to paying off your debts. See if you can use any of your skills such as web designing, coding, or writing to earn some extra cash on the side. If you find it exhausting to take up a second job, you could rent out a room on Airbnb or sell your old clothes online. Have a goal in mind and make it a point to make a few extra payments towards your debt.
You might have to break the cycle and build a few new habits to avoid overspending. For instance, you might have to start cooking at home to avoid eating out. You can downsize a bit and change your lifestyle to save a few dollars every month. Make a list of things that you value in life and match this list with your spending list. These lists have to match perfectly if you want to get out of your debt problem.
Make extra payments whenever possible
Making extra payments towards your debts can not only shorten your payoff time, but it can also save you a lot of dollars on interest. Moreover, it can also help improve your credit score by lowering your credit utilization ratio.
Consider consolidation or debt settlement
If you are stuck with too many debt payments, debt consolidation is a good option to consider. This can lower your monthly payments by getting you a consolidated loan at a lower interest rate. Although this can help you pay back your old debts, it will add another new debt that you will have to manage through the term. A better option would be debt settlement which will help you get debt free by paying your creditors less than what you owe.
There are many debt settlement agencies that make it possible to help you get debt free within the shortest span of time. Some of them might even get in touch with you directly through debt settlement leads. They will negotiate with your creditors to accept a lump sum pay out of your savings and settle your debt for good. However, this can impact your credit score negatively and make it difficult for you to avail credit for some time.
You will have to make a lot of sacrifices if you want to get out of your debt problem. It is not going to be easy, but you will have to see the bigger picture and move forward. Whether you decide to go with the debt settlement agency that comes to you via debt settlement leads or choose another option to get rid of your debts you will need a lot of determination and patience to get through. Remember – this is only a phase of your life. It will pass.