Tips to Help You Get Out of Debt Quickly

Tips to Help You Get Out of Debt Quickly

By TLB Contributing Writer: Nirdesh

The decision to get out of debt is usually a major one and a life changer for many people. It means doing away with the financial shackles that have been holding you back for years and coming in your way of financial independence. As such, it is never an easy one, and most people never manage to walk up to the last mile because they simply find it overwhelming and they get used to living in debt. If you decide that it is time to be debt-free, you must understand that a lot of commitment and hard work will be needed and here are a few tips to help you achieve this goal as soon as possible-:

Change your spending habit

One of the main reasons why you are in debt is because you are spending more than you can afford. You should understand that you are a creature of habits and there is no exception when it comes to spending your money. You have an underlying desire to eat in certain restaurants, spend in some store, drive a particular car and live in a certain neighborhood. This is irrespective of whether or not you have the necessary finances to comfortably grant you all those pleasantries. As a result, you end up incurring debts so that you can live the life you want. Therefore, a serious change in your spending must happen if you are to be aggressive with getting out of debt. If you continue spending the same way you have been spending, you will continue getting into more debt.

Get professional

Don’t be too embarrassed to ask for professional help by trying to dig yourself out of debt on your own when you could get assisted. There are a lot of nonprofit debt counseling agencies where you can always get free help from experts and make it easy and faster for you to be on the path to financial freedom. With the help of the credit counselors, you will understand how you first got into debt and what you need to do in order to get out of the debt. The counselors will also help you come up with practical plans for your debt management and they will be there to hold you accountable and ensure you don’t fall off along the way. Since these are free expert services, it makes a lot of sense to consider them if you truly want to get out of debt.

Make good use of debt-relief programs

Debt relief programs is another great resource worth considering in your journey to be debt-free. They are not a quick-fix solution to your debt problems but they will give you some financial reprieve to help you get back on track and avoid some debts. They normally take between three and five years, and so you will have to be patient. And it is important to have a good understanding of how such programs work and strive to work with a very reliable one.

Start working with a budget

Lack of a budget is another big reason why millions of people are in debt and why the still can’t get out of debt. It means that if you have made the decision to get out of debt, then you must have a budget to put your expenditure in check. With a budget, you will not just know how much money you have, but also your spending will be well guided since you will have an idea of what you need to purchase before you get to the stores. Additionally, a budget will help you identify some of those things you keep spending money on yet you don’t need them that much. That is how you will identify saving opportunities and use the money towards your debt repayment or use it to grow your savings.

Don’t pay multiple debts all at once

It may be tempting to pay all your debt at ones, hoping that in this way, you will clear them faster. But this is never a good idea. For example, if you have a student loan, mortgage, credit card debts etc. and you decide to be paying each every month, you will stretch yourself thin and ultimately, be getting out of debt may be slow and very painful. The best thing you can do is have one more look at your budget and streamline everything to the bare bones, and with the savings you get, start with the debt that has the highest interest rate. Don’t be afraid to go back and renegotiate the terms of your debt with your creditors and share with them how you plan to clear all of them. Most of them will be happy to cooperate with and give you terms that will be favorable to your endeavor.

Don’t close accounts when you pay them off

Most people have a problem of closing off accounts immediately they pay them off, but this is counterproductive as far as getting out of debt is concerned. This is because the credit scoring system depends on how much credit you have and not the amount of money you owe. If you leave the account open after paying it off, you will have some credit available, and this will indicate some restraint on your part and consequently improve your credit score in the long run.

Create an emergency fund

An emergency fund will be your savior during the rainy days. Even if you are neck deep in debt, it is imperative to be saving as this will from time to time give you some financial reprieve when certain emergency situations arise. In addition to an emergency fund, you should also set up a retirement fund, knowing that someday you will leave the active workforce and retire. The last thing you want is to retire not just empty handed but also in debt. It is recommended that you be saving between 10% – 15% of your monthly income towards your retirement.Go here for more information about emergency funds and how you to get out of debt fast.


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