How to Minimize Your Debt Level
‘Every time you borrow money, you are robbing your future self.’
Isn’t it tragic how easily one gets into debt? Coming out of it seems like an impossible path! Most people would borrow from their friends or other entities, but slowly the debt level increases. Think about it – Did you borrow a large sum for the right cause?
The good news is that you can minimize or completely knock out the appalling debt. You do not have to spend years or decades to pay off the debt. Here is an informative post that talks about the ways to minimize your debt level.
Before we get to the real deal, answer one question right this moment. Why are you in debt? Majority of the people use their credit cards to pay for clothes, groceries and even partying out. While it may seem tempting to swipe the card and not worry about your bank balance, you have to pay it later on.
Food, car fuel, electricity and gas are extremely expensive and families are trying to meet basic needs. Even if you were able to pay the debt last month, it shall continue next month as well. Right NOW is the time to be smart! You can minimize the debt level and become a wiser and responsible human!
We have a plan for you! Just follow the steps to minimize or eliminate the debt level. Let’s get started!
The First Step – Add Up
How much money have you borrowed? Add it all up and know the exact figure. Knowing how much you owe and what the interest rate is will help you to develop a strategy. Once you know the exact amount, figure out how much money you can pay each month.
When you have already taken a loan or have a credit card bill to pay, you cannot take further loans. Make a plan of how much you intend to pay each month. Work out a budget that includes your monthly expenses and savings. This way you would know how much you can afford to pay off each month.
The Second Step – Freeze the Credit Card
Do you remember the movie – Confessions of a Shopaholic? She had too many credit cards and loved to shop. At the end of the day, she had so much debt that it became an embarrassing situation. You can hide the credit card, give it to your mother or even freeze it.
The purpose is to stop creating further debt. Many people are committing crime and jumping off buildings because they are unable to pay debt. Is that a solution? Your family ends up in all the mess! Best way is to pay it off and not be under more debt.
The Third Step – Think of Ways To Increase Your Monthly Income
If you are the only person who is paying off the debt, think of different ways you can earn more money. Overtime is not the only way! Have a yard sale and sell off items you do not need! You can do freelancing or even walk the dogs in your neighbourhood.
Families are getting extra income by opening food stalls in the city or freelancing for big companies. Develop a debt-repayment plan/strategy! There are plenty of job opportunities everywhere. You can become an affiliate marketer, sell your talent, start a YouTube channel, write on a freelance basis for big companies and even sell your old furniture and clothes.
It is good to have a backup plan! This way you can save some extra money for your monthly essentials and pay the debt without any complaints.
The Fourth Step – Having an Emergency Fund
Usually people save up an emergency fund for sudden hospital visits. Debt is an emergency too! You can start saving some amount each month and tag it as an emergency fund. Whenever the debt level goes haywire, use the emergency fund to get out of the financial problem.
You can use this fund instead of using your credit card to pay the debt. The good part is that it is YOUR own money and you do not have to return it later. You can make more money, but paying the debt NOW is important.
Try and save up to £1000 as an emergency fund. The majority of people think that they would take the help of relatives and friends. Aren’t you borrowing money AGAIN? Money can ruin the best of relationships.
The Fifth Step – Get in Touch with the Lenders and Creditors
Negotiations can work well! You can speak to the lenders and creditors to reduce the interest rate. The terms of the debt can be improved too! All you need is clearer communication with the lenders. It is important to choose a legit lender who is not going to make your life a living hell!
Lowering interest rates can be helpful. Ideally, speak to them about improving the debt terms.
The Sixth Step – Pay More
You may have taken a student loan, personal loan, Payday loan, or have a whopping Wedding Loan. The key is to pay more than what you pay right now! It speeds up the paying up the process and you do not have to continue paying the debt for decades!
When you are younger, it is easier to pay off debt. As you get older, medical bills start creeping in. What is the minimum monthly payment? How much more can you afford to pay? The sooner you put an end to the debt, the better it gets!
Find a skill that you can monetize. It could be cooking, singing, writing or even giving financial advice. People are making money through a number of ways!
Cut the expenses for a few years or months and pay the debt faster! This way you can think of your future plans too. These were some of the most efficient ways of minimizing debt. Do you have a better idea? Tell us in the comment section and we will give you a shout out!
Quit all the unnecessary spending and eat at home. You can skip going for movies, eating in fancy restaurants or buying branded clothes. Focus on paying back! Once you put an end to the debt, you can plan better for your future. A new home, perhaps?
Minimize your debt level today!