There are instances wherein people need to take out loans, which may eventually result to numerous debts. Several factors may cause this scenario such as an economic downturn or a sudden loss of livelihood. Nevertheless, there are various hassle-free means with which you can clear out your debt.
List it down
It will be more apparent for you to know your debtors and how much you owe them if you have a clear list. Include in this list the schedule of payments for each of your debtors, as well as the due dates for each, to help you manage to make timely payments. With a summary of your debts, you will have an overall picture of all the debts you need to manage, making you think twice about your decisions about acquiring more debt in the future. Revisit this list periodically and update it as necessary.
Create a payment calendar
Managing your debts will be more effortless if you have a calendar of payments that reminds and notifies you of the payments due. There are already several tools online that you can download to help you make a payment calendar. With this, you will be able to make sure that your bills are paid on time each month because it is even harder to get out of debt with accrued interest and penalties.
With a bigger picture of how much you owe and the number of your debtors, you will have an idea if you indeed need to seek for help. You can consider seeking help from your immediate family and closest friends, but you also have the option of consulting with the experts. There are a number of consulting companies that can help you get your finances in order. Experts from Fresh Start says that a consulting company may help you find a financial solution that will save you time and money based on your goals. Not all troubles are the same so you’ll want someone that will tailor a solution based on your needs. More often than not, consultants from these companies will be able to guide you on how you can consolidate your debts as necessary, as well as manage your debt and settle payments. They can also help you validate your debts and repair your credit, or venture out the option of applying for a bankruptcy.
Consider the Debt Snowball Method
The debt snowball method is a way of paying off your debt starting from the one with the least amount up to the one with the greatest amount, or vice versa. The idea is to make an additional payment to one of your debts consistently until that debt is paid off in full. In parallel, continue to make minimum payments to the rest of your debts. After one of your debts is completely paid off, allot the amount that you used to pay off the debt you completed to the succeeding debt on your list. This will be the additional payment that you need to make to your succeeding debt, until it is completely paid off. Again in parallel, continue making the minimum payment to the rest of your debts. Repeat this process over and over again until you completely pay off the last debt on your list.
In performing the snowball method, you will need to decide on which debt you need to pay off first. Consider the debt with the highest interest rates because these tend to cost you more money. Also factor in other terms and conditions of your debts such as prepayment fees.
Build up an emergency fund
This will prove to be really challenging, especially if you merely have enough financial flow for debt repayment. However, even a small monthly amount will go a long way in building your emergency fund. This is because an emergency fund will prevent you from making more debts during unforeseen circumstances and unfortunate scenarios. Work towards a certain goal and practice strict measures to consistently build the sum of money up. For instance, you might need to give up eating out for a while until you have a sufficient amount in your emergency fund. After you hit your initial goal, it is recommended to push yourself even further and save up twice the amount, until such time that saving up for your emergency fund already becomes a habit.
To wrap things up, having to take out loans and being in debt is not an uncommon scenario. While it may be often difficult to rise above it, there are already several ways that can help you get out of debt eventually. There might also be a need to revisit your financial status and consider a lifestyle change if necessary to be able to enjoy being debt-free.