A person may find they are in debt and not know where to turn. They feel overwhelmed and like they will never have financial freedom again. This doesn’t have to be the case, as there are ways to climb out of debt and stay that way for good.
Anyone who is stuck in debt should first begin by determining exactly how much they owe. Without this information, it is hard to develop a plan that will clear the debt. In addition, when a person doesn’t know how much they owe, it becomes easy to overlook a payment. This leads to penalties and fees, which no person wants as they are trying to achieve a better financial future.
this information has been gathered, it is time to establish a plan. Get instant advice on Creditors Voluntary Liquidation whether you want free, confidential advice or assistance on the formal insolvency process.
Pay Extra Each Month
Any person who has debt should try to put extra money toward this debt each month. Doing so may be challenging, particularly when this individual lives paycheck to paycheck. However, paying a dollar or two toward debt each month pays off with time. When more can be put toward this debt, such as when the debtor receives a bonus at work, this will help clear the debt sooner.
Take Advantage of a Balance Transfer Card
If possible, get a balance transfer card. These cards typically come with a low introductory interest rate, which may even be zero percent. Continue paying the same amount on the debt that was being paid on the old card to help clear the debt faster. The money that was previously going to pay the interest on the debt is now being used to pay the debt itself, so it can be cleared in less time.
Pay Debt with Savings
Every person should have an emergency fund in place. Experts recommend three months of expenses be kept in the account at all times. Anything above that should be pulled out and used to pay off debt. This will reduce the amount of interest the debtor pays each month, so they can begin getting ahead. Once the debt has been cleared, this account can be replenished. However, until all debt is done, keep the account at three months of expenses. In addition, consider what is an actual expense. Don’t include extra items, such as streaming services and other subscriptions, as they aren’t necessities in life.
Find a Side Hustle
One option many people overlook when paying off debt is side hustles. There is no reason to get a second job if monthly expenses can be paid with regular income. However, a side hustle is a great way to pay a little extra toward debt.
For example, offer to babysit during the holiday season so parents can shop for their children. Someone with excellent writing skills may pick up work online using a freelance site, while a mechanic may do an oil change for a friend. The friend can pay them rather than an auto repair facility. These extra funds can be used to pay the debt down sooner.
When a person is told to sell items to pay off debt, they may feel they have nothing of value to sell. Be creative. Visit local thrift shops to find items in good condition that are in high demand. Take them home, clean them up, and list them on an online site. Another option is to go to yard sales during the summer months looking for great deals. If a person has a hobby that involves making things, these items may be offered for sale on the same sites.
Cash in Life Insurance
Many older individuals have more life insurance than they need. Their children are grown and gone, so they don’t need to provide for them any longer with an insurance policy. This only works for those individuals with whole life insurance policies and the individual must ensure they provide for a spouse or other family members who rely on them for support. Speak with a financial advisor to determine if this is a viable option. For many people, it is. However, that is not the case for all.
Find People in Similar Situations
Dave Ramsey is known for his financial advice on how to get out of debt. One of the things he likes to talk about is not living like others do. It can be hard to say no when friends want a night on the town or when coworkers are going out for a drink. Look for friends with a similar goal of getting out of debt. They understand the debtor’s situation and will plan things that don’t cost money. Both people in this relationship will be able to pay more toward debt without feeling isolated and like they never have fun.
Get a Loan to Consolidate Debt
Consider getting a debt consolidation loan with a lower interest rate to pay off debt. If this option is selected, use all money paid toward the debt prior to obtaining this loan to pay the loan down in the shortest time possible. In addition, do not take on any additional debt. People often get this loan and then use their credit cards again. They find they have actually made their financial situation worse by getting the loan. Commit to paying off the loan before using the credit cards again or get rid of the cards completely to avoid temptation.
Getting out of debt isn’t easy, but it can be done. Eat at home more, use coupons to save on food and necessary items, and benefit from the library and other free things around town. People who do so find they pay off their debt in less time. In addition, many of the habits they picked up while working to pay off this debt stay with them, so they don’t end up in a similar situation.
Never give up. Filing for bankruptcy should be the last option, as it harms a person’s credit. It’s not an easy solution to a difficult problem, although many people believe it is. Work on paying this debt off over time and make changes so more debt isn’t accrued. People who do so look forward to a better financial future and life all around.