A few years ago, I got into bad debt, but thankfully found my way out of it(or at least most of the way – still a bit to go). So I thought I would share a few things I learned along the way.
There is no question about it. Debt can be very daunting, especially for those people who are trying to pay it off on a limited budget. With very little money on your hands, paying a debt may seem impossible or even impractical. Don’t you sometimes just wish for your debts to disappear magically?
Well, your debt may not exactly disappear magically, but there are some approaches that you can use to get out of debt. The truth of the matter is that you are not alone on this. There are many other people with the same problem. There are also success stories of people who managed to pay off their debt despite the tough financial climate.
Check out the tips below to get you started:
As obvious as it sounds, you cannot truly get out of debt without cutting down on your spending. Even if you employ the best techniques to repay your debt, failure to reduce costs will make you pay for a longer period. Look at your monthly spending in detail. What can you change? Mark all the expenses that are unnecessary and divert these funds to the repayment of your debts.
Have a repayment plan
So, the adage goes, “Failure to plan is planning to fail”. True to this, your efforts to repay your debt are going to get stalled somewhere along the way if you don’t have a plan. Write down all the lenders that you owe them money. Determine just how much money you owe each of them and make their payment in the order of urgency. Factors such as the interest rate, the terms of the loan, and the amount owed will guide how you order for these payments. For more info, see this helpful article – How much time before debts written off
Set up automatic deductions
You may occasionally feel that those small payments that you are making are not worth it. However, you need to know that every cent counts. Setting up automatic deductions will help you to eradicate the urge of finding excuses not to remit your payments. Where possible, make arrangements with your bank to make payments on your behalf every month. Organize yourself, and avoid excessive spending as you already know that this money is headed elsewhere.
Watch your spending
This is very different from cutting costs. People get into debts due to poor spending choices. You probably found yourself in this situation because of poor spending decisions in the past. Of course, there are many potential and legitimate reasons why you may have gotten into debt such as school loans and home mortgage. Simply put, be proactive about how you pay your debt.
It may be overwhelming. Maybe sometimes you don’t know, or you are not sure of what to do about it. If you are stuck, seek professional help. The pressure from your creditors may leave you confused, and you may not know how to move forward. As you’ll later learn, all you need is good communication with your creditors, and you can work things out from here on how you can get out of debt.
Ultimately, you need commitment and the right mindset to pay off your debt with a limited budget. It is a hurdle that you can overcome. Be consistent and fulfill your promises. Also, nobody is perfect. So learn to forgive yourself for the small transgressions that you make along the way.