Being stuck in a debt cycle can be overwhelming. A large number of Americans are trapped in a debt quicksand without a clue of how to get out of it. According to reports, the debt rate of most American households has been on a consistent increase. Many of these debts comprise credit card debts, payday loans, and other debts.
Unfortunately, people get into debt and are unable to pay them off due to poor financial management. However, being in debt is not the end of the road as it is possible to be free from debt and make consistent progress towards gaining financial freedom.
If you are looking at paying off your debts very fast, the following tips will go a long way to help you achieve that.
#1. Organize Your Finances
This is the first step you need to take if you are trying to clear off your debts fast. Organizing your finances may require you to spend quality time going through your records and every financial document. It is important to know the people you are owing, how much you owe, the interest rate, as well as the maximum time you are required to clear off each debt.
This helps to give you a clearer picture of your financial standing, the amount you are expected to pay back and how best to go about paying it. It is also at this point that you work out a better budget that will help you achieve your financial goals.
#2. Start from the Largest Loan
It is important to start off your debt repayment journey with the largest loan on the list. How do you determine the largest loan on the list you may be wondering. The largest loan is not necessarily one with the largest principle. Rather, it is the loan that attracts the highest interest rate.
Any delay in the repayment of loans with a high-interest rate means that you end up paying more in the form of interest in the long run. Therefore, clearing off these loans first will go a long way in taking the stress off you. The money that you would have used in financing the debt will then be channeled towards paying off the remaining loans.
#3. Keep Track of Your Progress
Ensure you document your progress as you pay off the loans. Being able to glance at the progress you have made over the weeks will be a source of encouragement to do more. It will give you the push needed to continue your journey towards becoming debt-free.
#4. Consider Debt Consolidation
Many people have used debt consolidation to pay off their debts faster, especially high-interest debts like payday loans and credit card debts. You may be wondering how debt consolidation works. It is pretty straightforward. All you need to do is to take out one large loan and use it in paying off other debts.
Debt consolidation loans usually come with lower interests, therefore, making it possible to pay off the loan and save on interest in the long run. Additionally, a debt consolidation loan makes it possible to negotiate a more flexible payment plan thereby relieving you of the stress of short payment dates. Also, since you will technically be paying off one debt, you won’t have to worry about missing out on a payment date.
#5. Search for Extra Income Source
If you can earn more, it becomes easy to pay back debt faster. You may as well consider getting other income streams. Aside from your regular job, you can engage in a side-hustle that will bring in more money. Some of these side hustles include babysitting, dog walking, online tutoring, and so on.
#6. Cut Down on Your Expenses
It is possible that you have been spending the bulk of your income on non-essentials which leaves you with little to pay back your debt. However, a careful look into your expenses will reveal this.
It is important to take another look at your budget. By doing so, you will discover areas that you need to cut back on. You can then channel the extra money towards repaying your debt.
#7. Set Up an Emergency Funds
An emergency fund will not only help you pay off debts faster but stay off debts. Many people take out loans in times of emergency because they do not have cash stashed somewhere that they could use to take care of those unplanned expenditures. However, with a robust emergency fund, you can clear unexpected expenses without having to borrow money.
#8. Avoid Payday Loans
Payday loans have been presented to many as an easy way to take care of expenses. As true as this may sound, payday loans are more costly than you can imagine. Payday loans have a high-interest rate with a short repayment period usually between 2-4 weeks.
Many people who have been lured into the payday loan net by the promises it offers have found it difficult to come out of the debt. Ensure that you stay off payday loans.
#9. Speak to a Professional
If you have tried coming out of debt and have made little or no headway, you can consider speaking with a debt counselor. The job of a debt counselor is to analyze your financial situation and offer helpful advice on the best way to improve on it.
Bottom Line
Getting out of debt may be challenging but highly possible. Having the right approach and appropriate discipline will put you on your way to success.
Need help?
If you need help with payday loan consolidation or credit card debt consolidation, contact us today at 1-877-785-7817.
