How you can get out of debt
Getting out of debt is simple, but not easy
So you've decided to work your way out of debt and live a debt free life? Congratulations!
The strategy required to get out of debt is quite simple, but will require some hard work and discipline on your behalf in order to be effective.
Sorry, no quick fixes here. Just honest advice.
Here's how you can work your way out of debt.
Step One - Assess your spending
If you're in debt, you'll need to try and free up as much of your income as possible.
This is the ammunition that you'll use to repay your debt.
Do a budget, identify areas where you can eliminate or reduce your spending. Look at every single item.
The more you can find, the quicker you can repay your debit.
Even if you can't cut your expenditure on some items like utilities, shop around and see if you can get a better deal.
Also consider selling assets that you don't need. Do you really need that second car? It might be a luxury that could be sold to drastically reduce your debt.
The the end of this stage you should be left with a small pile of money each week to repay that debt.
Step Two - Assess your debt
Call up your lenders, get the low-down on all your debt.
You should be finding out:
- How much interest you're paying on your debt
- If you can make extra repayments
- Early repayment penalties (if any)
Step Three - Haggle yourself some breathing space
Don't be afraid to try and negotiate a better deal on your debt or take your business elsewhere (if viable).
You might be surprised how easy it is to switch to a cheaper loan or lender.
If this fails, try negotiating alternative payment terms that might make things easier.
Step Four - Attack the highest debt first
The higher the debt, the more it's costing you. Simple as that.
Attack the debt with the highest interest rate first.
The worst offender in the high interest rate stakes is usually the ubiquitous credit card.
Eventually repaying the highest debt will give you more funds to start attacking the cheaper debt in a snowball type fashion.
it will mean repaying your debt quicker.
Step Five - Don't take on more debt!
It seems obvious, but it's crucial you don't take on extra debt.
As tempting as it is to borrow to get through the next week, don't do it. Be disciplined and before you know it, that debt mountain will get a little smaller.