How To Get Out Of Debt
Getting out of debt is surely not an easy task, unless you win the lottery, you’ll be stuck in debt if you don’t do something about it. But before we tackle how you can get out of debt, let’s talk about how most people get into this unfortunate situation and maybe you could avoid doing their mistakes.
Common reasons why a person get into debt:
- Using credit card/s irresponsibly
- Getting too many loans
- Being unable to pay off loans/bills on time
- Borrowing a large amount of money with a high interest rate
- Unexpected medical expenses
So, what if you already made those mistakes, how can you get out of debt and live a debt-free life of your own at some point in time?
If you have that question in mind, here are some answers for you…
11 Ways To Get Out Of Debt
- Assess your finances
The very first thing you should do to help yourself get out of debt is know how your finances are doing. By doing this, you will know where to start and get a hold of your situation. It’s common to have a bad financial life whenever you got yourself debts, so it’s not the end of the world if you would find out that your finances are in a mess. Think of it as a challenge to do better than a failure on your part, it would be much better that way, don’t you think?
- Talk with a credit counselor
If you’re in trouble and you don’t know what to do, then the best way to find out what to do next is talk with someone knowledgeable enough about your current situation. A credit counselor can and will help you sort things out when it comes to your debts. He or she would give you options on how you can get out of debt and you could choose the best one that fits your current situation.
- Make a budget
Ah. Budget. You’ve heard that word before, but for some reasons of your own you did not have one or decided not to follow what you have made in the past. It’s up to you if you would make the same mistake again, the only thing that I could tell you is that having a budget would be a great help for you to get out of debt. If you want to know how you can build the right budget plan for you, read my previous article below.
- Live well below your means
Living a fancy life that you’re struggling to afford will only lead you to take on more debt, so the right thing for you to do now is live WELL below your means. You don’t want the interests to keep piling up for each passing months, don’t you? So, try cutting on some of your household expenses like your cable, so you can save some money and pay off your debts immediately.
- Get more sources of income
Your day job will not be enough in covering your daily needs and at the same time pay off your debts, so getting a second job is necessary. Unless you get promoted and get an increase in your salary, you will have to do this to pay off your debts faster. Some of the best second jobs you could take are online jobs, where you could work even if you’re at home.
- Try to negotiate
Talk with the person/s or institution/s whom you have debts and try to negotiate a better deal with them, you could ask if they could lower the interest, or just simply stop putting interest on your debt from now on until you paid all of it. If they do agree on that, then that would be great for you. If not, then you should try harder in negotiating with them.
- Pay the debt with the highest interest rate first
This one is very good strategy to follow, because you’ll end up paying the low-interest debts last. Determine your debt with the highest interest and start with that, after you finish paying it off proceed to the second high-interest debt and so on.
- Pay more than the minimum
If you’re only paying the minimum amount, then you’re doing it the wrong way. It’s going to take a very long time before you get out of debt if you do that, so try to ALWAYS PAY WAY MORE THAN THE MINIMUM from now on.
- Pay on time
Paying late would cause you money because of the penalty fees, so make sure that you’re paying on time and paying more than the minimum.
- Avoid impulse purchases
You don’t want to add up more debt, so avoid buying items out of impulse. You’ll just be wasting money and you could even make things worse for you. Just use that money to pay off your current debt/s first.
- Build your own emergency fund
Some may have gotten into debt because of emergency and immediate expenses, that’s why having your own emergency fund is a necessity, rather than a luxury from now on. This could really help you to avoid getting yourself into debt whenever something unexpected happen.
If you want to know more about emergency fund, read these articles below.
Those are my ways on how you can get out of debt, if you have any more suggestions that you personally do to get yourself out of debt, why not share it out below and let your fellow readers know about it.
To give you more useful information, here are other articles around the web that I found that could also help you get out of debt.
Other great articles that can help you get out of debt:
5 Things You Shouldn’t Do With Your Credit Card – Modest Money
Tips For Paying Down Your Debt Faster – The College Investor
Interesting Ways To Make Money Each Month – See Debt Run
3 Steps To Eliminate Impulse Spending – Budgeting In The Fun Stuff
Secrets To Helping You To Get Out Of Debt Quicker – Frugal Rules
Photo Courtesy of Alan Cleaver