If you’ve recently enrolled in post-secondary school, purchased a home, or started a business, then it’s more than likely that you’re currently facing a large amount of debt. If you don’t know how to deal with it, your debt will slowly grow until it becomes a serious problem.
Although it may seem like an uphill battle, there are several ways that you can get rid of your debt; the first thing on the list is learning how to reduce your debt. If you have a large amount of debt that you need to tackle immediately, be sure to use these effective debt-reduction tips.
1 – Consider Using a Debt Consolidation Program
Many people have more than one type of debt. Examples can range from credit card payments to ancient student fees. When you have multiple debts, it can be difficult to make your payments on time. This is why many people sign up for debt consolidation programs.
For those that don’t know, a debt consolidation program is a service that amalgamates your unsecured debt into one lower monthly payment, including credit cards, payday loans, and unsecured lines of credit. This means that they add all of your monthly payments together, making it easier to keep up with payments, plus you also get interest relief
If you want to learn more about debt consolidation, be sure to get in contact with a non-profit credit counseling agency. These organizations offer unbiased, holistic guidance and counseling for people that are dealing with multiple forms of debt. Not to mention, many of these organizations offer free debt assessments.
2 – Set a Reasonable Budget
Setting a budget can be easy, however, sticking to it is an entirely different story. If you want to deal with your debt like a pro, you need to learn to set a realistic budget for yourself. This means you have to cut back on non-essential expenses. Some examples of common (and avoidable) expenses are:
- Eating out at restaurants
- Shopping for new clothes
- Entertainment
- Travelling
- Personal hobbies
- Expensive habits
However, just because you need to cut back on these expenditures, that doesn’t mean that you have to cut them out completely. Be sure to leave some wiggle room in your budget. This way you have some extra cash for a new jacket or a fun night with your friends.
3 – Get Rid of Your Unnecessary Belongings
Do you have expensive, bulky items collecting dust in your home? If you do, then you should consider selling them online or at a garage sale. Both options have their fair share of positive and negative aspects.
If you choose to sell your items online, you’ll be able to reach a large customer base, but you will most likely have to pay a fee to list your items on a third-party website. Additionally, you may have to cover shipping or delivery costs, which reduce your overall profit.
On the other hand, garage sales are generally inexpensive and can be quite effective. If you live in a small or tight-knit community, you can easily post signs or flyers in nearby neighbourhoods. However, if you get hit with bad weather or live off of the beaten path, your garage sale may not be as successful as you anticipated.
Regardless of what option you choose, both are great ways to declutter your home, make some side-money and chip away at your debt.
4 – Avoid Making Minimum Payments
Unless you want to be paying off your debts for years, you need to start making larger monthly payments. This is because most payment systems are designed to keep people trapped for as long as possible. If you only make the minimum monthly payment, you could end up being in debt for over a decade! This will limit you and your ability to purchase things like homes and vehicles.
If you make large monthly payments, you will not only speed up the entire process, but you will also be able to save on interest over time.
If you’re currently facing a mountain of debt, you need to work quickly to ensure that it doesn’t get out of hand. By making use of these helpful tips, you can stay on top of your debt and have it paid off in no time.