Are you suffering from debt?
Whether you owe a large sum of money to a bank or you borrowed some money from your grandmother, debt can really interfere with your progress.
Paying off debt requires a great deal of determination and persistence. However, if you fail to deal with debt as soon as possible, there’s a good chance you will sink further into debt. The following are some ways to help you pay off your debt faster.
1. Stop or limit your use of credit cards
Credit cards are incredibly convenient. You only need to swipe the card and you get what you want. However, these are debts that need to be paid eventually. If you continue to use credit cards, your debt will continue to pile up. You will find it harder to deal with debt that you may currently have.
Use only cash to make purchases. Restrict the use of your credit cards to emergency situations such as medical expenses. You may want to leave your credit card at home to avoid the temptation to use it.
2. Scale back on your spending
Many people spend more than they actually need to. Making changes in your spending habits can result in big savings. These excess funds can be directed towards paying off debts.
Take note of how you spend money. Could you do with skipping the daily coffee run at your favorite coffee shop? Cooking more meals at home and looking for free alternatives to weekend activities can go a long way to saving money. These small savings add up.
3. Pay more than the minimum
Paying the minimum monthly payment toward your debt may result in you taking years to pay it off. In addition, interest charges will result in you paying much more.
If you can afford to, do your best to pay more than the minimum required monthly installment towards your debt. This will help you clear your debt much sooner. You will save money on interest as a result.
It is important to check the payment policy on your loan. Some lenders charge a fee for early repayments.
4. Deal with your smaller debts first
Paying off debt can seem overwhelming, especially if you have to deal with multiple debts. A great way to approach your debts is to use the snowball effect. List them all down as well as the outstanding amounts. Strive to pay off the smaller debts first. You can do this by putting all the extra money you have towards paying the small debts first.
You will find that dealing with the smaller debts first will result in the numerous debts you need to deal with disappearing one by one. This will free up more money to put into paying off larger debts. Getting rid of the smaller debts will also help to ease the psychological burden.
5. Deal with debts with the highest interest rates first
While some prefer the snowball method mentioned above, it can be more beneficial to deal with the debts that have higher interest rates first. This will help you save more in interest in the long run. This makes more financial sense as your ultimate goal is to clear all your debts. You will therefore still have to clear these debts. It makes sense to deal with them sooner rather than later.
6. Increase your income
If you want to get out of debt faster, consider looking for ways to increase your income. Higher income will mean more money available to pay your debts.
There are various ways you can increase your income. You could ask for a raise at your current place of work if you are due for one. You could also look for another job with better pay. If these options are not available to you, consider getting a second job. Freelancing online, for example, can help you earn some extra money to repay your debts faster.
7. Sell stuff you do not need
Another great way to drum up some extra cash is by selling items that you do not need. Look around your home. Do you have stuff lying around that you do not need? There could be someone that could use the items you do not need.
There are lots of ways you can get rid of your stuff and earn something from them. Search online for websites that allow you to sell used items or Facebook groups where you can advertise your items.
8. Negotiate for better rates
If you have high interest rates on your credit cards, it can seem impossible to make any headway in paying up the balances. It is worth taking the opportunity to negotiate for better rates. Many credit card companies are willing to offer lower interest rates when approached by clients. Their primary interest is being able to get their money back.
You can apply the same approach to other bills including cable. Getting better rates can help to reduce your monthly expenses, leaving more money to use in paying debts.
9. Use public transport
If you have a car, you may be able to cut back on expenses by opting to use public transport. You may also opt to carpool with workmates to save money on fuel. You can use the money saved to pay off your debts. If you are frequent Grab or Gojek user, you might want to cut down on private transport as well.
10. Surround yourself with people that will help you
Many people end up spending much more than they need to as a result of peer pressure. The people you spend the most time with influence your spending habits. If you want to cut back on spending, you should distance yourself from people who encourage you to spend money. This may mean a drastic change in your social life.
11. Learn to say no
It is important to learn to say no. This will help you take better control of your spending habits. You will have to learn to say no to people that want to borrow money from you. You may have to turn down invitations to social events that will mean spending money that you can’t afford to spend at the moment. Learning to say no is powerful in your journey to living debt-free.