6 Ways to climb Out of Debt in 2020
18-12-2020 by Evelyn John
We are all in debt. Small or big, everyone is in debt to another, for a wide variety of reasons. Even the countries we are living jn are in massive debt. What I am trying to say is, debt is very common, nothing special.
It’s because people spend more than they have each month, thanks to the possibilities of credit. So it’s easy to understand how so many people are struggling with debt, and why some of them are practically buried in it.
And they are soo in debt, that it frightened them to think about it. So they don’t. At all.
But sometimes, some things happen and people are forced open their eyes to their present situations and the state they are in. Painful… But unavoidable.
It may be a sudden job loss, a serious medical need Or need for a vehicle, it effects your finances so bad sometimes that even their lifestyle is changed. And it’s in these moments of disaster when we finally realized how precarious our financial situations were and how important it was to be more careful.
And that is the moment where you start hitting your head on the wall. Well don’t go for it yet. Maybe there is still a way for you to get out of the debt-shit-hole and start a normal life.
Yes that’s right, you can. But it won’t be that easy.
To get out of debt, you need a plan and most importantly, you need to execute that plan. Well we can help with the planning of your plan, and if you can follow it, ta da.. You’re debt free!!!
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1. Know where you stand
In order to get out of debt, first you need to know how much is your debt.
Oh common.. You are so focused on meeting your daily needs that you actually have no idea where you stand and how much debt you have.
So the first step, know your position clearly, and correctly. And for that, gather all data and take a look at all the details related to your credit, like your bill statements of credit cards and loans, credit reports, credit score and etc.
To tackle a problem, you must at least know the problem.
2. List out your debt, and your income
Once you have your data in hand, arrange it. make a list, or a table of all your debts, also including the name of your creditor, minimum monthly payment, interest rate and Balance
Next,make another list or table on how much you need to pay in order to pay off the debt’s balance within a predetermined targeted time frame . Make sure you include every debt.
Make a plan based on your current income for paying off these debts. Make sure to contribute everything to the debt payment excluding your living expanse. Plan smart, live smart.
3. Reduce Your Interest Rates
Interest on loans or credit cards is like having to run with an iron ball tied to your leg. The more you owe, the more interest you’re charged and the more you owe. And this continues as an endless loop.
If you find yourself with more credit card debt or debt from loans than you can handle, one way to at least start getting ahead of that debt is to
Reduce and pay the lowest interest possible. Here are ways you might lower your interest rates.
Depending on your credit rating, Get a Credit Card with a Lower Interest Rate
, you may qualify for a credit card that has a better interest rate than your current card.
You will need a credit rating of at least good for the best chances.
4. Pay More, more than you should.
Don’t worry, it helps, let me explain.
There’s no rule that you have to make only the monthly minimum payment on your credit card or loan. You can always pay more. And the more you pay, the faster your debt reduces.
However, if you pay off your credits early, make sure there’s no prepayment penalty. And, for a loan, make sure your extra payments go to the principal and not the interest.
5. Spend Less.
And if you want to pay more, you should spend less. Yes, say bye bye to that weekly fast food, designer cloth and dance shoe you love. Channel those money to paying off debt.
The extra money you save, just like any extra you earn, can go straight to paying down your debt.
6. Create a Budget and Stick to it.
After you’ve gathered your total debt details and have decided how much extra you can pay each month and have reduced interest rates and earning or spending, now you should have a goal and should know where you’re heading and how you’re doing.
A budget and/or a debt management plan and Constant analysis of these plans can help and they don’t have to be complicated.
A budget shows you what you’re spending where and where and whether it makes sense. It can be a part of your budget or separate.
So these are some tips through which you can stay out of debt systematically, while on it, don’t forget to live your life. For that try creating an emergency fund for necessary situations and also make sure you stick to the plan.
Always remember, just like losing weight, losing debt takes time. But it’s not impossible. It’s not about a quick fix, it’s about taking control and changing your habits for the good and to achieve your financial goals.
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