Money Saving Tips to Get Out of Debt
Wouldn’t it be nice if all the debt you have accumulated over the years could disappear? We know, being in debt can be a stressful experience and no matter what your circumstances are, if you signed for a loan, you are unfortunately obligated to pay it back even if you have a life altering experience like losing a job, getting into an accident, or even if you have increased expenses due to having children.
Most of the time debt can just be an unintended consequence of too much holiday spending, or overspending any time of year. Many people try to get out of debt, but life slaps them in the face hard enough that people tend to give up.
Make a payment plan
You need to start by determining just how much debt you have and write down the different lenders that you owe money to, then place the debt by order of which debt you think needs to paid off first (look at the amount owed, the terms of the loan and the interest rate).
Then you need to determine how much you can afford to pay each month, and once you have worked out how much you can afford to pay each month, then you need to figure out how much of the total amount you have will go to each loan.
An important thing to remember is that if you are deeply in debt, you can also attempt to negotiate a repayment plan with your credit provider, which may help you reduce your payments or get better loan terms.
Set up automatic deductions
If you have a small or limited budget, you might be feeling like your small little payment isn’t worth it however, every little bit helps. Setting up automatic deductions will prevent you from falling into the trap of finding different excuses not to make debt payments.
If you have the money taken out of your bank account at the same time each month, you will need to factor that into your budget and pay attention to your account. Therefor you should determine how much you can afford to pay on your debt each month and have that money paid automatically.
We know what you are thinking… this tip is obvious, however if you are on a tight budget, you truly cannot get out of debt if you don’t cut costs (or it will take you a very long time to reduce your debt). Start by evaluating your monthly spending and see what you can change, like cutting expenses will leave more available funds to help you pay off your debt. This is as simple as you stopping to eat out at restaurants, or working-out at home instead of a gym.
If you feel like your budget is already limiting, cutting down on expenses may be hard but it does help you get out of debt faster – this will help you get extra money which you can use to pay off your debt.
Change your spending habits
Its sounds like the cutting costs tip, doesn’t it? Uhm…No. You got yourself into debt, and there are several reasons why, from home loans, to car finance or school loans, and even though these debts are probably legitimate and even necessary. You also might have debt from poor spending choices in the past. Either way, you have to decide to stop spending now if you want to get out of debt quickly.
Regardless of whether you are an impulse buyer or not, if you truly want to be debt-free, you need to choose to pay debt down instead of getting more. So step with the credit cards.
Get Help from a Debt Counsellor
Seeking help from a credit debt counselling agency might be a good idea if you feel overwhelmed and over-indebted.
People sometimes wonder if they should borrow money in order to pay off debt. If you have multiple debts but don’t think you need a debt counsellor yet, then you can consider consolidating your debt. However you need to consider the interest rates and loan details of any new loan you are thinking of getting.
Having a limited budget shouldn’t stop you from paying off your debt, but it can definitely make it more difficult.