Debt can have many negative effects on one’s life. It can prevent you from buying the things you want or delay major life goals, such as buying a home, getting married, and even retirement. These are the steps to take to get rid of debt fast.
List Down All of Your Debt
The initial step you need to take if you’re ready to tackle on debt is to review the type of debt you have. List down each one and include the details- the amount, the due dates, and to whom you owe them from. For better viewing, arrange them from smallest to the highest.
Choose Your Debt Repayment Method
The way to pay off debt is not the same for everyone, but it helps if you have a clear plan ahead about which method to use. There are basically three debt repayment styles.
Debt snowball- this method involves paying your debt starting from the smallest to the highest debt first, regardless of the interest rate. In this style, you pay only the minimum in your other debts and put majority of your cash towards repayment of the smallest debt. This makes it faster to achieve a small goal, and develop some sense of psychological encouragement.
Highest interest rate first- on the other hand, this method concentrates on paying off the debt with the highest interest rate first. This one is seen as the most cost-effective method, because it helps avoid spending unnecessarily on interests.
Debt Tsunami- this method focuses on paying debt in the order of their emotional impact, which according to some can best create momentum on your repayments.
Live Within Your Means
It could really be challenging to move away from the lifestyle that you got accustomed to, but it’s up to you to decide if you want to continue accumulating debt for momentary luxuries and joy.
Living within the income that you earn may not be enough though if you’re paying off debt, because what you need is to bring down your expenses even further to get rid of debt completely. Not only can it help you save money from interests that you would have to pay, but it can ease your worries that much sooner.
Start Using Cash
It may be hard to give up the convenience of bringing plastic cards, but as of now, it could be the best way to avoid temptation, especially if you haven’t really mastered the skill to resist impulse purchases yet. Using cash alone may be counter-intuitive if you’re trying to repair your credit, but you also have to consider the further damage it can do to your credit if you begin making expensive and unnecessary charges again, which can slow the process of repaying your debt.
Consider Getting a Second Source of Income
If all else fails despite the saving measures that you’ve done, perhaps you need to take a second look at your income and expenses. If your income barely exceeds your expenditures and debt repayment needs, perhaps it’s time you get a second job. It can be temporary as you repay back your dues, or keep it permanent so you’d have more money to save for your future and your other wants instead of resorting to borrowing.