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Expert Strategies for Getting Rid of Your Personal Debts Once and For All

Posted By:  |  January 17, 2014  |  0 Comment(s)

Expert Debt strategies

If your debt is growing uncontrollably, leaving you feeling more helpless every day, then you need to take a step back and confront the situation. Stop waiting. Debt should not be treated lightly, as it can affect your life not only financially, but also emotionally and physically – debt can be the cause of big time stress. The following strategies are meant to give you some pointers on how you can get debt relief once and for all.

1. Stop Adding to the Pile of Debt by Creating a Budget

If you have already acquired an impressive amount of debt, then the first step to take in becoming debt-free is to stop accumulating more. In short, you need to cut your spending. The way to go about this is by making a budget, where you calculate all your costs (both the ones that are certain, such as rent and phone bills, and the possible costs, such as gifts and going out) and all your earnings. Take this quick test: Subtract the total costs from the total earnings and if you wind up with a negative number, then you must go back and adjust your costs. Dead simple. Be honest with yourself, and decide which costs are unnecessary. This may be difficult to do, because technically what you are considering is adjusting your standard of living. However, remember that getting debt relief is going to feel much nicer than purchasing something else you probably don’t really need.

2. Get a Pre-Paid Card

Pre-paid cards work much like credit cards. The difference is that you won’t be able to spend more money than you actually have. You can get pre-paid cards issued by major brands like MasterCard, Visa, American Express or Discover. You can feel confident that your money is safe. This practice fits perfectly in line with setting up your budget. Simply decide the things you will need to buy the upcoming month, determine how much that will cost, then load only that much money onto the card. the next month (or every couple weeks, depending on your preference) do the same. If you have a hard time with impulse spending, getting a pre-paid card might be a helpful solution for you.

3. Look for Ways to Earn More Income

This one may not be an option for everyone, especially if they have an extremely busy schedule. However, if you think that you may be able to sacrifice some hours, consider getting a temporary part time job that will help you obtain more income. This will make it easier for you to pay your debt off and become debt free faster. In an ideal situation, you could simply get another job in your sector that pays better. However, this is unrealistic for many people, which is why the strategy of getting a part time job is usually a more viable solution.

4. Save Some Money in an Emergency Fund

This goes back to budgeting, and the importance of reducing your costs as much as possible. Aside from paying off your debt, you should also consider putting some money into an emergency fund. Life is full of surprises, some of which are not positive. And some of the surprises can be expensive! It’s for these types of situations that you should have some money saved, because if they happen to take place while you are struggling to pay off the debt, you will find it very hard to borrow more money to get yourself out of that situation. Having some money on the side is a great idea, and it is useful even after you have become debt-free.

5. Pay Your Bills On Time

This strategy is important not only when it comes to debt-relief, but also for your credit score. If you pay your bills on time, you will avoid paying fees. This means that you will save yourself from having to throw away money that could have been used for other things. Plus, you will also save yourself money indirectly, because this strategy also gives you better credit score, which, in turn, will give you better interest rates.

Start now! There’s no reason to wait on being debt free. The most important step is making a budget, because that will allow you to organize your finances, and will force you to be more mindful of the financial choices you make every day.

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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