Debt is a kind of trap that grasps you once you lose control over your financial management. It sounds a bit rhetorical, but unfortunately, it comprises some truth in it. Actually, it is not a simple deal to get out of debt, but Alexander the Great says: “There is nothing impossible to him who will try.” Here is the list of actions that can probably help you out to say goodbye to all your debts.
Prioritize your Debt Repayment Plan
As soon as you define the repayment of your debt as a priority number one, you need to set up a well-organized plan in order to have the first-step motivation.
Start the process from listing your Debts
First and foremost, you need to write down all your outstanding obligations and look at the real picture with pink glasses off. We strongly advise concentrating all your debts into one list, including borrowed funds from family members or friends.
Classification of Debts
Secondly, you need to classify your debts and understand the start point of the repayment. It is a piece of very general advice to rank your debts from the smallest to the biggest amount. Meanwhile, there is one more viewpoint that encourages starting the repayment process from the credits with the highest interest rates. Frankly speaking, the second method is much more advantageous as borrowers will not be forced to suffer from high APRs for a long while.
Target only one debt
It is very important to focus only on one obligation. Try to concentrate all additional funds for the payment of the most privileged debt while making required (minimum) installments for other credits.
Never stop the repayment process
Once you complete the repayment of the first debt in your list, turn to the second one without having a break. This kind of heavy load will keep you afloat until you have completed your list.
Think about the savings
As soon as you finish the repayment process, you need to set up emergency funds and try to juice it up by all possible means. This is one of the best options to overcome unexpected financial difficulties that may be faced further.
Get rid of credits with high-interest rates
Actually, high APRs are one of the most dangerous happenings while you are trying to get out of debt. There can be two real options to make rates lower and save money.
Make a simple request
Get in touch with your lender and request a reasonable APR either on a permanent or temporary basis.
Use balance transfer cards
You can easily transfer your debt to a balance transfer card and get a chance to possess a credit even with a lower interest rate. Moreover, you can make a pretty profitable deal during promotional periods and pay no interest within a fixed period of time.
Try not to use credit cards
As soon as you start to pay off your debts, you need to eliminate all possible means of expenses. The weak link of every spendthrift is the credit card, thus you need to abandon it and use either cash or debit cards. Alternatively, you can forget about your credit card for some periods if you possess such strong willpower.
Debt Consolidation can also be a good choice
The term debt consolidation is known as a concentration of outstanding obligations into one single debt. If you hold too many debts and want to collect them into one, then you can turn to debt consolidation loans. Besides, it can be a good opportunity to shop for a low-interest loan.
Be careful with the debt-to-income-ratio
This is one of the main indicators that show your financial position in the scope of your income against your debts. A good debt-to-income ratio is classified as under thirty percent. If you want to maintain stable financial management, you need to keep this ratio as low as it is possible.
Forget about predatory loans
If you want to take out short-term credits such as payday loans online with quick approvals, you need to deal with exclusively licensed and reputable lenders. Practically, none of the financial experts advise shopping for small loans while working on the debt repayment process. However, if your case requires obtaining one, you must not forget about the trustworthiness of lenders or connecting platforms that you are eager to cooperate with.