Throwing bills and reminders into the garbage or inside drawers will not make the debt disappear. You have to take the bull by the horns and overcome staggering debt through hard work and proper debt management. Paying back your debt can be a long haul, and, in spite of paying, the bottom line may seem to be moving at a snail’s pace.
The question generally on our minds is, Is it possible to get out of debt quickly? Yes, you can. The key is to stay focused. Focus on the end goal, the debt free days when your paycheck will be yours alone with nobody pinching out of it. But remember not to add on any more debt or you’ll be carrying the debt burden even longer.
Here are some tips that can help you pay back your debt faster.
* Make debt repayment a priority. Break the habit of paying only the minimum payment on your outstanding balance. The more time you take to repay, the more the interest rate adds up. Pay as much as you can, over and above the minimum payment.
*Liquidate your savings rather than pay a huge interest rate. You can start saving again once you are out of debt. Dig into your savings account, where you are earning an interest rate of 2%, instead of paying the 18% – 19% interest on your debt.
*Borrow from family and friends. It is wise to borrow from family and friends who can loan you the amount. You might get an interest free loan or a loan at a nominal rate. But be sure to return the money or relationships may go sour.
*Look out for that extra income that can help. A part-time job, some extra work or freelancing can help.
* Control unwanted expenses. Make a budget. Throw out those unwanted expenses. Learn to live frugally for the time being. Devise your own method for spending.
* Get a loan against insurance policies. If you take a loan against your insurance policy, you will need to pay interest, but it is sure to be much lower than the commercial rate, and you can repay it at your convenience.
* Use a home equity loan. If you own a mortgage-free house, you can take out a maximum loan against it. The advantage of taking this loan is that the interest rate charged is 6-7%, and additionally, you get a tax rebate on the loan amount.
* Cancel all your credit cards. Credit cards can be very tempting. While cards can be advantageous if used wisely, they can become a burden if not used properly. If you are trying to get out of debt, bury the credit cards.
* Make a debt repayment plan. If you need help, contact debt management professionals, who assist people looking for a way to reduce their payments.
Debt management does not just end with paying off your debt successfully. You have to plan to save and invest and not fall into the debt trap again. Be conscious about your spending and live without debt. If all the above tips don’t help, you may need a good debt management plan or expert counselling to streamline your life.