Stop what you’re doing now and take a quick run through of your debts, how’re your finances doing?
We’ve all been there. Getting yourself trapped in a never-ending debt cycle is a dreadful nightmare we can’t wait to wake up from. Later on, you’d realize you’ve been in this hell hole of a nightmare for a long time—it’s become a reality.
Now that you’ve somehow got through these challenges and picking yourself up from the mud, time to focus on getting your finances back on track and pay of those debts. Here are a few ways you can do to recover and pay off your outstanding debts.
Develop a payment plan
There’s no easy way to settle out of debt if you don’t try and help yourself get through it. First things first: start making your own payment plan that will suit your budget and meet your needs.
Getting out of debt isn’t as easy as baking a cookie. You’re going to need a plan. Write down all the lenders you owe money to. Then organize which debt needs to be repaid first—prioritize the most important and urgent debts. Review the terms and of course, the interest rate.
Now that you’ve got a bird’s eye view of all your dues, regulate how much money you can allot to it each month. Now, determine how much goes to each loan. If the loan isn’t a priority and can be paid off later on, to accomplish the most urgent first. Also, don’t forget that you can negotiate, at least try to.
Track your finances
This strategy is beneficial not only for those managing their money to pay off debts but also for those saving money. Tracking how much of your money comes in and out, and where it all goes is a life saver. So many temptations were overcome with this tactic.
It’s simple. Take note of every penny you spent on your transportation expenses to bills and utilities down to your coffee expense. Here you’ll realize how much money goes to waste and things you can do to stretch your budget.
It’s essential to identify where your money goes as it’s not easy to earn some; you better make wise money decisions (which financial tracking will teach you how) and ask yourself next time before you purchase something if it’s a want or need.
Cut corners
This is a no-brainer. This is what people usually jump into first when on a tight budget, saving money and paying off debts. What most people miss is the ‘planning’ stage (remember #1?).
Cutting expenses allow you to add more funds to pay off your loans or have extra for something else. Having a limited budget doesn’t essentially equate to being broke, it means being responsible and you, having identified your priorities.
Where can you cut down? Instead of stopping by your go-to coffee house, make one at home or in the office. Pack your lunch instead of eating outside and paying a hefty price. You can take the transit to work for some days instead of bringing your car to save up on gas and toll fees. These are only somewhere cutting costs is possible. Know what works best for you. Reevaluate your spending habits.
Pay more whenever you can
Regardless if it’s credit card debt, your payday loan or other kinds of loan, the best way to tackle your debt is by paying down the minimum monthly payment. Even better, pay more than the minimum to gradually lift a heavy burden off your shoulders . . . and pocket.
Besides, penalty fees and increased interest rates are no friends so that’s one more reason to pay off quick.
Look for other possible sources of income
Sometimes, your primary source of income may not be enough especially if there come unexpected shortcomings. Everyone’s been there.
Maximize your skills and time in ways you can earn extra income. Monetize out of mowing your neighbor’s lawns, babysitting, house sitting, freelancing, and other numerous sidelines within your reach.
If all else fails, you can always ask for help. But if you keep in mind these strategies, you may have a chance to redeem yourself and your wallet.
What other strategies you’ve tried and think are helpful? Don’t forget to share it with others, leave a comment below!
About the author: Chie is a daytime writer for Depreciator – Tax Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aids the Australian property market.