How to get rid of debt? No one wants to be in debt, but sometimes it happens.
Fortunately, even then, not all days are over and there are ways to deal with the debt sooner or later.
Of course, how to get rid of debts will depend on their total amount, but the following procedures still remain more or less universal.
16 TIP HOW TO GET RID OF DEBT
1. STOP USING CREDIT CARDS
If you really want to get out of debt, stop using credit cards. The longer and more often you use them, the worse your financial balance is.
If you have a problem saying goodbye to credit cards, you can always choose a drastic solution and freeze them, or even cut them into pieces, which will stop you from using them one hundred percent.
2. PAY AS MUCH AS YOU CAN ALLOW EVERY MONTH
In this case, it is simple mathematics. The more you manage to repay the debt each month, the faster you will get rid of it and you will be free from this unpleasant obligation.
When it comes to a situation in which you deal with getting rid of debts, every extra crown paid counts.
3. HOW TO GET RED OF DEBT? START SPENDING LESS
Take a good look at your spending and where your hard-earned money is going.
You can often find that you spend extra money on seemingly small expenses, which, however, are gradually added due to their regularity. Such as trips to your favorite cafe.
If you reduce these extra expenses, you will suddenly have more money, which you will then be able to use to get out of debt much faster.
4. USE UNEXPECTED BONUSES TO PAY OFF
If you have suddenly received an unexpected financial bonus, whether in the form of a work bonus or a tax refund, do not spend this amount on pleasure, however tempting it may be.
Instead, overcome it and pay off all of your debt, or at least part of it, depending on the amount of your debt.
5. WORK AS A FREELANCER AND EARN MORE MONEY
If you have a little extra free time (which you usually spend watching TV or social networking, for example), try to make extra money as a freelancer.
In some cases, you can even receive very well paid jobs if you prove your skills and good luck to you.
You can then use the money for these contracts to pay off the debt. And because it’s a bonus for what you already earn in your regular job, you won’t be deprived of yourself.
6. PAY OFF THE DEBT WITH THE HIGHEST INTEREST
Some people, when it comes to getting rid of debt, prefer the so-called snowball method.
In practice, this means that you pay off the smallest debts first, if you have more, and then you move on to the more serious ones.
From a financial point of view, however, it makes more sense to pay the debt with the highest interest rate first, and only then focus on others.
Of course, the end goal in both cases is to pay off the debt, so in the end it is up to you what strategy you choose to achieve this goal.
7. STOP CREATING ADDITIONAL DEBT
Unfortunately, this step alone will not relieve you of your debts, but at least ensure that your financial situation does not deteriorate.
If you add more and more to your existing debts as you repay them, you will make little, if any, progress.
Therefore, resist the temptation and do not create more debts, at least until you pay others, ideally never again.
If you really have to borrow, then choose a solid loan that will not burden you with high fees and interest.
8. INCREASE YOUR MONTHLY PAYMENT
If you spend only the bare minimum on your debts each month, it will take you a long time to get rid of them.
And when you finally pay off your debts, you’re likely to pay twice or even three times the original amount in interest.
Therefore, in the long run, it is better to try to increase your monthly payment, at least if your current financial situation allows it.
9. BUILD A RESCUE FUND
A rescue fund may sound like a silly measure, because if you’re trying to get out of debt, you could use the money from a potential fund to pay off the debt, right?
But in reality, the rescue fund can help you avoid creating additional debts by providing you with a financial safety net that you can use instead of a credit card in the event of an emergency.
The ideal rescue fund should then contain six to twelve months of your average monthly costs, but to begin with, you should focus on building a financial advance of at least twenty to thirty thousand.
10. CHOOSE ONE DEBT AND FOCUS ON IT
We have already partially mentioned this step before and it makes sense especially if you are repaying several debts at once.
Some people increase the minimum installments only slowly, but this way your debt decreases very little each month.
Instead, you can make visible progress by sacrificing one large payment to one of your debts each month until that debt is fully repaid.
During this period, pay off your other debts with the help of minimum amounts. Once one debt is repaid, focus your attention on the next and do so until all are repaid.
11. ASK YOUR CREDITOR FOR A LOWER INTEREST RATE
Higher interest rates often result in you struggling with debt for longer, because a large percentage of your monthly payment falls on interest and not on the underlying debt itself.
Therefore, you can try to ask your lender for a lower interest rate.
Customers with a good payment history can sometimes negotiate lower interest rates, but this depends on the case. However, you will not pay anything for the exam and the question.
12. TAKE MONEY FROM THE PENSION FUND
This step is not exactly the best, but when it comes to debt worries, it can help.
If you regularly put money in a pension fund from an early age, you can try to use some of it to repay the debt.
Of course, you run the risk of paying an early redemption fee and also missing out on the money you take out to pay off your debt.
So if you have any other option, prefer it to this option.
13. SETTLE DEBT WITH CREDITORS
If you manage to accumulate a sufficient amount of money, settling a debt at once may be the right solution if, for example, you owe more money than you could repay in a few years.
To settle your debt means asking the creditor to accept a lump sum to pay off the debt.
Creditors who settle in this way also agree to cancel the rest of the debt. However, creditors usually accept this type of offer only in cases where there is a risk of default.
14. ASK FOR HELP FOR FRIEND OR FAMILY
If your debt maturity is burning and nothing else is helping, no other option is offered, you can try to ask your loved ones, family and friends for help.
If you manage to arrange a loan, don’t forget to set the exact conditions when and how you pay the borrowed money – and then agree to abide by.
Getting help from family and friends is then easier, especially if it is a smaller debt.
15. SELL EVERYTHING YOU DO NOT NEED
If you are looking for a way to make money quickly, it pays to look at what you already own. Most people have things at home that they rarely or not use at all and would do without.
So why not sell everything you don’t need and use the profits to pay off your debts? You can sell things on the Internet, use social networks, websites like eBay or go to a flea market where you can set up a stall.
16. BUY THINGS FROM THE SECOND HAND
When it comes to buying things, second-hand goods can be as valuable and high quality as brand new pieces. And if you are currently facing the question of how to get rid of debts, every crown saved will come in handy.
Or if you can’t come to terms with the idea of not buying new goods, simply wait until the debt is paid and only then buy what you want.