Paying off debt may take some time, discipline, and lots of sacrifices. It requires you to let go of a certain lifestyle and spending patterns so that you can keep up with monthly bills and some extra savings for the rainy days. The good thing is, knowledge of financial literacy has recently come in handy with resources online, financial coaches, and advisers who will help you sort out your financial burdens.
Why People Stay in Debt
Despite debt-free campaigns, why do people stay in debt for most of their lives? One reason is the failure to keep a financial plan. If people solely rely on intuition in making financial decisions, they may experience difficulty regulating their finances. Without a budget, determining how much money a household needs will not be possible, and thus, one may find themselves engaging in unexpected spending.
As the spending gets out of control, many people would realize that they only have limited cash left for significant needs. They have to incur debt again to pay in an attempt to cover their monthly expenses. The number of debts may worsen when people, unfortunately, lost their jobs. At this time, they may be paying the added interests of their existing debts. On the other hand, the underemployed may tend to rely mostly on their credits to keep up with their expenses despite having a substandard income.
Stop the habit of incurring debts and change your life now! Here’s how.
Create an organized list of all your debts and bills.
Most people do not realize the financial trouble they got themselves into because they have not actually seen or computed the accumulated amount of their bills and debts. When in a list, one can get an overall picture of the recurring loans, bills, and other fixed expenses. From this, one may devise a debt paydown strategy to pay off debt. Make sure that the list is comprehensive — double-check all documents to avoid missing anything.
Strive to pay more than the minimum amount required.
Paying more would mean decreasing the amount of time to repay the debt. First, you have to examine your budget and decide how much extra money to be added to the minimum. From there, you can also decide to limit spending on other aspects of your budget to add more amount for debt payment.
Try implementing the debt snowball method.
Besides paying more than the minimum amount, consider the debt snowball method to decrease your debts. In this method, you prioritize paying off your smallest debt to eliminate it quickly. This means that you can allot minimum payment for all your debts but pay extra money for the smallest debt. After the debt is paid off, you can move on to the next smallest debt quickly. You repeat the same strategy until all your debts, including the big ones, will be paid off. Focusing on the smallest debt will enable you to focus and stay motivated to be more careful in your budget to pay the other debts.
Consider refinancing debt
Refinancing debts is a good way to repay debt faster and avoid annoying interests. One common way is to avail of a debt consolidation loan. This method involves making a new personal loan with super-low interest to pay off existing debts.
Consider settling your debts with the help of double settlement companies.
Settling for less than you owe is also an option to get out of debt. This requires the assistance of creditors and debt settlement companies to act as a third-party company that provides debt settlement services for a fee. Meanwhile, these companies may offer you a temporary way to settle the debt; the effort comes at a cost. In exchange for erasing your debt, you end up paying the debt settlement agency 25% of the amount of your savings, leaving you with a much smaller amount in your savings.
If you are caught in a bad legal case involving debts, do not hesitate to get the services of a collections attorney. Choose the lawyer who can offer smart and practical payment plan arrangements while settling your case in court. For example, if you live in Salt Lake City, you can search for a reputable debt collections attorney. Lawyers living in the same location may provide you with convenient ways to solve your case. They also are knowledgeable in updated laws and regulations to speed up the developments of your case.
A debt-free lifestyle is possible if you stay determined and committed to paying off your debts. Be consistent with the positive changes you want to make in your spending habits. Take advantage of online sources and apps to budget your money. Stay focused, and hopeful. Remember, this may be your only chance to turn your life around.