In recent years, accumulating debt has become quite common. Most people readily think of this debt in form of a loan for a home, car and/or education. But, a good portion of this misery is also seen by people who have been careless with their credit cards. While prevention is better than the cure, there are several ways you can accelerate the paying back process.
Shrink your bills
For somebody in debt, perhaps curbing some luxuries should be a good place to start. Begin with understanding where your money is going. These include all the bills; cell phone, internet, credit cards, gas and electricity, rent, insurance, etc. A lot of times, you will find out that you’ve been paying for utilities that you don’t even use; if you don’t watch majority of the channels on your TV, then stop paying for those channels (ask yourself, “is it really worth spending the extra money for 1 channel out of a package of 20?”) and apply this attitude to similar expenses. This means that you have to become smart at shopping and analyzing your spending, also (Maybe we can hyperlink “shopping on a budget” article here). Overall, your goal should be to try to trim your expenses by at least $250-$400 each month.
Adopt healthier habits: Save First, Spend Later
Overspending (or simply spending on nonsensical things) seems engraved in our genetic makeup. Now, it’s okay to have these habits if you are financially stable, but disastrous if you are not. Saving is a big friend of someone in debt. You may say, “I don’t have any money to put away by the time I’m done paying things off” but you should be considering our first suggestion at shrinking bills. We all know how unpredictable life can be and being laid off/getting fired or medical emergencies is one of those spontaneous occurrences that can put you in a nasty situation. In such instances, not only will paying for living become a next to impossible, but so will your debt situation will just get worse if you couldn’t make a payment. So save whenever and as much as you can to allow yourself to have a rainy day fund.
Put it in higher priority
You never want to be in a situation where you have to miss paying your installment. To do this, you must adapt a lifestyle where paying off your debt is high on your list of priorities. The main idea behind this strategy is to pay more than what is required. Your lender thrives on the interest you are paying, but you can very easily change that by paying a little more than just the basic (whenever you can). Not only will you pay less overall, but you will also be able to pay off your debt quicker. You should try to divert an extra 10-15% of your paycheck towards paying your debt. Tax returns make a great example for this purpose as well.
Sell off your (unnecessary) belongings
If you think you have items in your house with significant financial value that serve no purpose for you, consider selling it off to raise money you can put towards your debt. Depending on your success, you will be able to put a significant dent on your principle if you add it to your monthly payment.
Talk to your Lender
One of the obvious things many people don’t try is talking to your lender for some help. If you can explain your financial hardships to your lender, they may be able to offer you some deferment on the interest. This can come very handy if you are financially okay and can still pay the usual amount; all that money for interest would go towards your principle during this time.
Lastly, stay healthy
You may find this tip to come out of the blue, but with all the financial hardships you may be dealing with as is, the last thing you want to do is deal with is an overwhelming medical bill. So practice eating healthy and exercising daily.