Nothing personal to anyone, but there is a phrase which talks about the spending nature of Americans. It says that most people in America have an addiction to living beyond their means, spending unconsciously and partaking a lot in retail therapy shopping. Swiping and forgetting is the most common phrase for this! Whosoever has written this phrase, we want to point out here that this addiction is prevalent with lot of other people. If you are facing a debt slump right now, we know it is highly demotivating to share more than 70% of your salary towards debt installments. You would feel demotivated to sacrifice so much but it is worth it in the long run. Here are few tips which can help you in staying motivated while paying off your debt:
- It improves your credit score: Credit score is everything these days! Your payment history, credit utilization, types of credit, number of accounts and length of credit history all affects your credit score. You will be able to qualify for loans, credit cards loaded with offers, mortgages and even a good job (some employers pull credit reports of their candidates) if your credit score is high. Paying off debt in a timely fashion improves your credit score and you successfully make up to the list of few people in the world who have a great credit score! In the future if you want a loan, companies would be more than willing to provide you with a paper free instant loan (at least that’s what they term it)! Your next installment could move you one level up in the list of credit worthy people.
- Read money blogs: There are lot of financial blogs which are published in dailies which provides stats of people who owe XYZ amount to the loan companies. These blogs not only advise you to manage your expenses and pass through this tough phase but also make you feel better as you read about other people who are/were struggling like you and have become debt-free now!
- Look at the positive side: Along with improving your credit score, your debt component can help mold you into a financially managed person. This means that you learn to carry out best utilization of your monthly expenses with small portions of money. Debt makes you mature as you don’t want to end up taking a debt to repay other! So always be sure to look at options of cutting down on your lavish lifestyle and manage your finances accordingly.
- Make an extra principal payment: installments of debt are spread across certain time spans. Your installments are fixed for the entire duration, but the component of interest and principal may differ. In the initial months, the interest component is more than the principal element of the installment. As the principal component keeps on decreasing, your interest element decreases, and principal proportion raises up. Nothing can make you happier than making an extra payment towards your debt. Try saving some money by selling items that you don’t need or by over-timing etc and put that towards repayment. It will not only decrease your loan amount but will leave you feeling motivated and better about your finances overall!
