Most Effective Ways to Get Out of Debt
We’d love to pay down our debt or get rid of it altogether, but we aren’t quite sure of the best way to do it. There really isn’t any one “best way” that works perfectly for everyone. Here are few suggestions to get started, if these are achieved, the faster to get out of debt.
– Pay More Than the Minimum
Always pay more than the minimum payments. Paying minimum credit card installments takes forever to pay off balance. Paying off balance quickly, saves lots of interest money.
– Spend Less Than You Plan to Spend
We get into, and stay in debt because we only buy the “wants”. Want something? Buy it with available cash. If you can be satisfied with less than you would ideally want, then you can use the money that you are saving to put towards other financial priorities.
- Pay Off Your Most Expensive Debts First
Make minimum payments on all debts and credit cards, except for the debt that has the highest interest rate. Choose the one debt that is charging you the most interest and focus all of your extra payments on paying that one off first. This strategy, sometimes referred to as the snowball method, will get you out of debt quickly, and you will feel encouraged as you see your progress.
– Reduce on Car Mortgage and Household Expenses.
Consider purchasing a second-hand car that’s in good condition, this will reduce expenses on mortgage and interest. One-car-policy in the family is also a good consideration.
Save up on groceries and other household items by stock-piling on non-perishable items when they are on sale.
– Get a Second Job and Accelerate Debt Payments
Having extra jobs converts to extra cash! This means your ability to pay faster on your debts.
- Track Your Spending and Analyze Where to Cut Back
Track your actual expenses—not what you should be spending over the course of a month. Once you know your spending habits, you should be able to identify areas where you can cut back. Allocate the money you “find” to paying down your debts.
> Get a Consolidation Loan
Ask your bank or credit union help you consolidate all of your consumer debts into one loan with one payment at a lower interest rate. Getting a debt consolidation loan will only help if you set your payment goals.
> Speak With a Credit Counsellor and Create a Spending Plan.
Speaking with a Credit Counsellor will help you pinpoint the weaknesses and strengths of your finances. You will be assisted on the best option to get out of debt. Credit Counsellor also helps create spending plan, a realistic one.
Some people don’t like budgets, but have they tried one? If you’ve lived all your life without a budget, how do you know you won’t like having one? After trying a realistic budget, most people agree that the alternative—being in debt—is much worse.