No one willingly chooses to be in debt, it happens in trying to solve some issues in different areas of life like health, education, accommodation, business growth, feeding, etc. For whatever reason of borrowing that money, one thing is certain and that is “it must be paid back in most cases within a stipulated time”. The agony that comes with it has made many very shameful, sick; while many debtors have even died out of depression. With the right approach in debt payment, these negative effects wouldn’t occur. This article is about how to get out of debt in simple and practical ways.
How To Get Out Of Debt
Decide to stop borrowing: the very first step of how to get out of debt is to stop borrowing. Else, you end up increasing the amount owed. It might be hard, but you can do this by making a conscious decision to stop borrowing; and by creating emergency funds account. No matter how little the emergency fund is, you can easily use in case of some uncertainties; because it was some emergency that landed you to debt in the first case. This helps to keep the owed amount on a standstill for gradual elimination.
Write down how much debt you owe: This is one big part may debtors fail to do. Instead, they would rather prefer to bow their heads in shame and depression; without at a glance being able to say how much money they really need to pay off. Having maintained your debt level from step 1, it is time to really write down how much exactly you owe including their different sources. Once you have arrived at the actual figure, don’t be scared to face it. Just bear two things in mind, that many people in the world even have more debt than you; and secondary, tell yourself with all seriousness that the number will only be going down henceforth.
Decide who to pay first: before arriving at a decision on whom to start paying first, arrange your debt in order of increasing interest rate. Higher interest rate means higher debt and longer time of debt freedom. You don’t need to feel pressured or being considerate of whom to favor first with your cash. Only one thing should be paramount to you here and that is “How to be out of debt faster”. So in arriving at this aim, you have to pay off ones with higher interest rate first. If they all have the same interest rate, you can choose to pay off the smaller amount in order to reduce the numbers of people you are indebted to.
Live by budgeting: you know how much comes to your pocket daily, weekly or monthly, map out how much from your funds will be going for your upkeep while using the rest to offset some debts. To stick by this budget, you may need to eliminate all forms of temptation that will allow you to intrude into the debt account by either taking out your wallet, dumping out your credit cards or placing them where you cannot reach.
Negotiate for a lower interest rate: most credits companies are not as rigid as you thought. You will be amazed on how much debt will be out of your account with just few minutes of discussion. Tell your creditor that you have decided to pay up the money in a much faster way but you will be needing help of having the interest rate reduced to enable you pay the debt faster. You can even negotiate 50% discount interest rate.
Payment time: having reduced the amount owed from step 5, you can start paying the debt from step 4 money. Then look for ways to generate extra cash like part job in, selling off unneeded items in the house, you may even have some gift of money. Whatever extra fund you are able to generate, channel all into paying off your creditors and stick to your daily budget in Step 4. You will even be surprised how all your debts disappear very faster than you could imagine.
This are simple and practical steps of how to get out of debt. I hope it was informative and value adding to you.