One of the easiest ways to get stuck in debt is through payday loans. These loans have got many people who are not keen on their finances in a chokehold.
Unfortunately, no matter how easily accessible payday loans are, it’s a debt trap that keeps people in an unending loan cycle.
The thought of being stuck and trying to get out of a payday loan may seem hopeless, but it doesn’t mean you’d have to stay stuck in a debt situation forever.
To offset these loans and let loose from the shackles of payday loans, you need to first find out the reasons why you’re stuck in this debt trap.
Today we shall discuss a few reasons why people get stuck in this debt trap and possible ways out.
Ready, let’s begin!
Making Only Minimum Payments
One way to get stuck in debt, especially payday loans, is to make only minimum payments. If you’re only making minimum payments, there are limited chances for you to get out of debt.
This will make your interest charges go out of control, thereby making it harder to pay your debt. To avoid this, try as much as you can to reduce expenses and put more money toward paying off your debt.
Not Consolidating Your Debt
If you’re stuck in a payday loan debt, try debt consolidation. Not Consolidating your debt will lengthen your repayment time.
The more you miss your payment, the more your interest rate accrues, the bigger the loan gets, and the more time it takes to pay off your loan.
Debt consolidation helps you to merge payday loans you owe into a single loan, making it easier to clear out your debt.
If you don’t consolidate your debt, a large bulk of your monthly payment will go toward the interest rather than the principal loan, keeping you neck-deep in debt.
Not Having a Debt Management Plan
Another reason you’re stuck in debt is not having a debt management plan. If you’re in this situation, a credit counseling agency can help you set up a debt management plan which could double as a sort of loan relief.
With this plan, a counselor would be assigned to you. He or she then negotiates with your creditors on your behalf to create new, workable repayment plans.
Sometimes, depending on the agreement between your counselor and creditor, your creditor may waive fees and lower the interest rates on your accounts.
Not Using a Budget
Budgeting helps you plan your spending. Account statements and credit card statements can help you track your spending effectively.
If you do not budget your finances, you need to start now. Use a budget and ensure to take out a certain amount for debt repayment.
You can do this on a monthly or weekly basis depending on your debt repayment plan.
Not Paying Off High-Interest Debt Faster
You’ll save on interest if you pay off high-interest debt faster. To do this, you’ll have to decide which debts to be paid off according to their priority and interest charge.
Reborrowing To Pay Debt
If you are unable to repay your loan on the agreed time, the loan interest rolls over. As you keep delaying the repayment, it eventually becomes bigger than the initial loan amount.
What you have to do is, stop reborrowing to pay your debts. Instead, go get help with payday loans. You can speak with loan counselors, they’ll help you get access to payday loan relief programs to settle your payday loans.
Not Having a Side Hustle
The fact that you are in debt indicates that your normal income is not enough to carry your needs & wants, hence the need to borrow. Getting a side hustle will go a long way to complement your finances and give you room to make payments for your debt.
A few side hustles you can engage in to help increase your income include:
- Online Paid Surveys
- Freelance Writing
- Virtual Assistant
- Social media Manager
- Blog Writing
- Online Tutoring but to mention a few
Conclusion
The only way to get out of debt is to offset these debts. By following these tips discussed above coupled with some discipline, you’ll be able to get out of debt in no time.
