Are you tired of feeling like debt is holding you back? Have you been making consistent payments, but you’re ready to speed things up and finally put it all behind you? Debt comes in many forms, such as student loans from your school days, high credit card debt from a period of unemployment, or countless other pitfalls. It can hold you back from doing things like starting a new career, buying a home, or saving for retirement.
What you need are some surefire strategies that will get you out of debt.
Recognize When Your Debt Is Too Much
It’s important to recognize when your debt is too big for you to do anything about it. If you lose income or if you’re overwhelmed by high-interest debt, collection calls, or wage garnishments, saving is no longer an option.
There are ways to get out of debt when you can’t do it on your own. Check out these 6 ways to get debt relief, including credit counselling, debt consolidation, consumer proposals, and bankruptcy. When debt feels overwhelming, the best course of action is to talk to a professional such as a Licensed Insolvency Trustee who can assess your financial situation. They will advise you on the best course of action.
Sometimes taking actions like getting a debt consolidation loan will only delay the inevitable. A fresh financial start using a consumer proposal or bankruptcy may be the fastest and most cost-effective way out of debt.
Pay More than Minimum
If you’re scraping by making minimum payments, look to Step #1. Minimum payments maximize the amount of money you pay to the lender, at the expense of your own financial health. Your debts can more than double unless you increase how much you pay.
Earn More Money
Out of all the financial advice around, “earn more money” easily has the highest easier-said-than-done factor. If you are in a position to take on a second job, do some freelance work, or earn a bit extra by selling unwanted belongings, you can quickly supplement your income. Keep in mind that a second job can really be draining.
One realistic thing you can do is this: the next time you get a raise or a promotion, don’t change your spending habits at all. Put all the extra money toward paying back debt.
Use the Snowball Method
If you’ve got debts on multiple accounts, sometimes it makes sense to keep up with minimum payments on all but one, while you put as much money as possible toward striking that debt off your list. Using the snowball method, you take on the smallest debts first. It’s a great way to get momentum and motivation going.
Use the Avalanche Method
The snowball method is great if you need some motivation, but the avalanche method is the most cost-effective way to get out of debt. With this, you target your highest-interest debt first. That’s the most expensive debt you have. By paying it off sooner, you’ll have more money at your disposal to tackle everything else.
Getting out of debt on your own is possible. Take a smarter approach to your finances, and you can be debt-free in no time.