It is everyone’s dream to always live a debt-free life but sometimes it just doesn’t happen. Having a debt is not an unusual thing, but it all gets hard when it starts hindering your plans. There are many strategies on how to get out of debt and stop being a slave to creditors.
You will always have to repay that loan, regardless of the size or your current circumstances. Here are 5 personal financial tips that will help you eliminate or at least reduce your debts.
1. Cut your expenses
If you really want to eliminate your debts, you will have to work on your expenses. There are always those needs that could wait, or are just not as important as the loans. To be clear, I don’t mean you live a ‘begging life’, all you have to do is adjust your financial management.
You don’t have to go clubbing, for instance, every other day. You could save the cash and channel it to your creditors. Even the smallest amount can work miracles in your pursuit of a debt-free life. So, for a start, just reduce your spending and free as much money as you can.
2. Start by repaying the smallest debt.
You might be in a situation where you have to repay more than one creditor. Don’t panic, there is a way to work around your problem. You will first have to organize your debts from the smallest to the largest. Once you have your list in order, you can now start your plans of eliminating the smallest before focusing on the larger one.
In order to maintain a good credit status, you will have to have a regular repayment of all your loans. So, how do you eliminate the smaller one while regularly repaying the rest? All you have to do is channel a larger amount of your money to the smaller one and a small amount to the larger ones. After you are done with the smaller debt, shift your focus to the next smaller debt until that time when you will be remaining with one creditor to repay.
What this method does is give you that psychological motivation and with no time, you will be remaining with only one debt to repay.
3. Pay more on your outstanding loan
There is always a minimum amount set by either you or your creditor to repay in every installment. Following that plan is fine, but what if you want to get rid of your debt quickly? The answer is, repay more than the minimum per installment. This will reduce your repayment period.Some creditors might want you to formalize your adjustments but that is not always necessary.
Apart from reducing your repayment period, this method will also help you save on interest throughout the life of your loan. That, therefore, means you will repay lesser than you would have if you had used the normal repayment plan.
To reap the fruits out of this method, you will have to start sooner than later. The earlier you begin, the more you will save. So, start adjusting your monthly budget now.
4. Monetize your talent and use it to repay your debts
If you are dependent on your 8-5 job for your income, why not try something extra? Everyone has a talent. It could be sports, singing, playing musical instruments or even writing. There are many ways you could use your talent to earn that extra cash. You could use your musical talent every evening after your normal job and earn some extra dollars which will help you repay your debts.
If you are good at writing or blogging, there are lots of genuine websites out there that offer writing jobs. It might be a long shot to some, given the requirements, but it’s worth a try. So, grab your laptop and sign up to such websites and boost your repayment plan today.
5. Use any excess money for your loan repayment
There is always that extra cash that comes your way throughout the year. Make it an habit to always throw that extra cash at your debt. It could be very little but it helps. The more you do that, the faster you repay your loan.
So there you have your 5 personal financial tips that will help you get out of your debt. Start with the simpler one and as you gain momentum, move to the more demanding ones. There is no success without sacrifice, so you might have to sacrifice a few o