Last Updated on Apr 8, 2020 by James W
In a world of easy credit, rising costs and low wage growth, it can be all too easy to find yourself in debt and struggling to get your head back above water. If you’re starting to feel the pinch and are looking for a way out of the debt trap, here are a few strategies:
Consolidate or ‘Snowball’ Your Debts
The most common, and frequently most efficient way of getting out of debt fast is by accessing quick loans to consolidate your debts into one easy-to-manage loan. The main benefit of this is having one competitive interest rate, as opposed to several high ones that can set you back hundreds, if not thousands, of dollars. If you’re happy with your current loan set up, the other option is to snowball your debts. This involves listing your debts from smallest to largest and focusing on those smaller ones to get them out of the way. Pay the minimum on the big loans and the maximum on the smaller ones. Before long, you’re able to say goodbye to those little, pesky loans.
Sell Everything You Don’t Need
Salespeople these days are very convincing. You may walk into a department store for a simple blender, and before you know it, you’re signed up to a 60-month finance agreement on a home theater system. If you’re feeling the pinch, it might be time to sell off some of your tools and toys. Get rid of anything you don’t use enough to warrant keeping, and put that spare cash into removing your debt.
Cut Out Luxuries
We often do what makes us happy. For some, that’s cooking a nice meal, but for others, it’s buying expensive items that give us instant satisfaction and gratification. If your splurging is causing you to live beyond your means, it’s time to go on a bare-bones budget. Cut out all luxuries, such as daily $5 coffees, of which Americans drink 3.1 per day, and at the end of the week you’ll notice just how much money you’ve been wasting.
Negotiate Lower Rates
Seven in 10 Americans have at least one credit card, but the way in which you use it could be affecting your financial stability. Look at your interest rate. Is it higher than average? Are you getting the best deal possible? Believe it or not, asking your credit card supplier for a better interest rate is a common request and could save you hundreds of dollars in interest per year.
If your bank is not playing ball with interest rate reduction, consider what other banks are willing to offer. Often, balance transfers, which mean transferring the balance of your credit card to another bank’s credit card, grant you a year’s breathing space with no interest. This is no free pass to slack off on paying down your debts. If you stay disciplined with your repayments, you can make serious inroads into the principle.
Pay more than the minimum
It goes without saying that paying only the minimum is not going to get you out of debt in a hurry. If rapid removal of your debt burden is your aim, always pay more than the minimum amount. Push yourself to pay as much as you possibly can to see those balances dwindle, and interest payments evaporate.
No one likes being in debt, and being unable live their life to the fullest. Take back control of your situation by budgeting, cutting out luxuries, and formatting your loans to repay them quicker. Being responsible with money can spell financial success for your future.