Aug 22, 2017

Hanging debts can create stress for anyone and the amount of debt owed each year seems to be rising in the United States at a rapid pace. By 2015, $7821 was owed by an average American towards his/her credit card provider while a graduate student was flirting with more than $35000 in student loans.

Whichever way you look at it, debt is growing along with our routine hustle and bustle. And in the effort to reach the financial zen, some are struggling 24/7 while others have just given up.

What if we tell you that you can get your way out of your debts, not only successfully but also in no time?

Hard to believe?

Read on!

Pulling the Plug Off!

The first thing that you need to do is to pull the plug on all activities that will only increase your existing debt further. Translating the statement into a course of action, you need to make sure that you minimize credit card purchases and stop looking for financing schemes that may help you in affording commodities for now, only to add up to your credit later. Moving a gear further, you can also set-a-side an emergency fund for yourself to avoid ground hog day options like payday cash and cash advances in case of a future need

Sorting Your Debts

Once you have ensured that you won’t be adding to your debts, it’s time to sort them out. Here you can use two techniques to organize your debts and organize your repayments.

First in line is the Debt Ladder Method. In this method, you prioritize your debts according to the interest rates. Place the debt with highest interest rate at the top of your priority list and then list them in the descending order. Once you have the list, pay them accordingly. Target the debts with higher interest rates as it will help you avoid the heftier default charges, which keep piling on.

Another strategy that you can use is the Debt Snowball Method. According to this technique you will be paying your smallest debt first and then the next one as per the list organized in an ascending order. By settling off the lowest debt first, it will help you gain momentum and confidence, which is essential when settling your debts.

Reviewing Your Budget

With debts prioritized, it is now time to review your budget and look for improvements that can help you generate more surplus to pay off your debts quickly.

Look for any expenses that you can cut off for now and target towards increased revenue. This means cashing in on a talent or skill that you may possess, work extra hours at your current job or find a second job to help you increase your income.  

You can also negotiate for a lower interest rate on your credit card, car insurance rates, monthly rent and fees that you have to pay to your cable and internet service provider. Negotiation strategies may include comparative analysis, going for multiple services from the same provider or offering a full upfront payment.

Getting Rid of the Unwanted

If you feel your house is too crowded with the unwanted, it’s time for some spring cleaning. Make a list of things that you can dispose off for some cash or you no longer use. Organize a yard sale and use the generated cash to help you settle your debts.

So pull up your pants, it’s time to chase off your debts!

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