Clearing out your debts isn’t easy, and it is harder when you have not won a lottery jackpot. Sometimes it takes all your monthly earnings to keep up with monthly bills and savings, let alone making monthly loan repayments. Living a debt-free life is everyone’s goal.
However, there are many ways to get out of debt, and not all of them will make you depressed. Look at the alternatives stated below. It will help you get out of debts faster.
5 Ways to get out of debt
Here are five ways to get started.
- Always pay more than the required minimum amount.
One way to speed up debt reduction is to pay more than the required amount on loans every month. This strategy works best since every payment made over your minimum monthly payment is made directly to the principal of your loan. The more you can pay every month, the faster you reduce your debts.
- Consolidate debt with a personal loan
Merging your high-interest rate loans with a personal loan is another smart way to get out of debts quickly. This method means taking out a personal loan with a lower interest rate, a cooperative loan for instance, to pay off existing debts, usually with high-interest rates.
This strategy enables the borrower to focus on repaying debts with a lower interest rate compared to the high-end interest rates. Personal loans in Nigeria are mostly suited for debt consolidation because they come with fixed interest rates and fixed monthly payments. So you know how much cash you owe in a given period.
At this stage, having your own collateral is a great step forward to avoid loan rejection, and get you the loan to clear off your loans.
- You can earn more money.
Like we have mentioned earlier, meeting monthly financial obligations can be overwhelming. If you’re tight on cash every month and can’t seem to meet up with your bills, it may be time to revamp your income in whatever way you can. This may mean working more hours or picking up a side hustle to boost your income.
If you make more money, channel all the extra cash towards paying off your debts. Steer clear the temptations of spending such money.
- Cut your expenses drastically.
While earning extra money is a smart way to reduce your debts, cutting your expenses at the same time will get you out of poverty. Although cutting back on spending can also be a more comfortable alternative to working more hours, but don’t forget that you can do both.
Start with the little things such as subscription payments, reducing your grocery lists or even postponing vacations. Cut the costs of what you want and focus more on what you need.
- Stop racking up more debts.
Finally, you’ll never get out of debt if you don’t adopt a disciplined spending habit. Stop borrowing to buy things you can’t afford. Remember, every loan application you make appears on your credit report and ultimately affects your credit score.
To start a debt repayment plan that works, you need to stop adding to your debts. And make sure you stay away from taking out new loans unless you need to.
To stay out of debt, always learn to live within your means instead of consistently and conveniently using loans as your support; seek investment opportunities to help you earn more and you’ll be living a debt free life in no time.
And if you run into bankruptcy as an organisation, find out how to get a loan after going bankrupt.