Most people become victims of debt at some point in their lives. It is in these situations that you will need to find help to manage your finances and get back into the clear. Learning proper money management skills can go a long way, from helping you learn to properly budget to learning how to save to avoid any future debt problems – see Creditfix for more information.
Some debts will be more urgent than others. Ensuring that your rent and utilities are paid is for example, more important than paying off any store cards. You need to look at which penalties will be most severe. Having interest added to your total for some debts is far less severe than losing your house or having your water, gas, or electric switched off.
Pay More Than the Minimum
Making minimum payments mean that you won’t be penalised, but you may take a lot longer to completely clear your debts. This also means that you may be subjected to further interest charges for longer.
Instead, if you are able, it can be useful to pay as much as you can each month. The sooner you are debt-free, the sooner you can move forward with your life.
Take on More Work
While this may not be ideal, increasing your hours or jobs, and, therefore, salary, can help you remove any debt a lot sooner.
A part-time role, weekend role, or even a few extra hours at your current job can also help you build and stockpile savings. If you have spare money at your disposal, unexpected expenses are less likely to put you in the red.
Remove Small Debts First
If you have numerous debts, it may be confusing to figure out where you should start paying them off. Here, it can be useful to start with your smallest debt as it will be the easiest to get rid of.
This can help keep you motivated to remove all debt and take away one potential money-grabber quickly. Then, you can work through the rest of your debts in size order.
Each one will get more challenging size-wise, however, you will have already had practice in managing the one prior, so it should not feel too overwhelming.
If possible, continue transferring your balances for the best deals while you pay off your loans. Some credit card companies allow you 0% for up to 4 years, which can come in handy.
By continually changing your provider, you will only have to pay off your debts themselves, as opposed to any interest on top. Combining this with reducing the limit on the card as you pay it off will stop you from falling into any more borrowing traps or paying any more than is necessary.
Getting rid of debt will take a lot of dedication, as well as changing your pre-existing relationship with money. Debt doesn’t have to last forever. You can change your situation, and your behaviors so that you do not end up back here again.
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