EIGHT STRATEGIC STEPS TO GET OUT OF DEBTS THIS YEAR.

Stuck in debt? Debts can be draining, especially if they keep pilling up. Fortunately, you can become debt-free easily if you follow the right process.

There are two known approaches drafted by financial experts, the “avalanche” and “snowball” approaches. Using the Avalanche approach you are required to start with the highest interest rate first to pay off your loan.

While, the snowball method entails you paying off from the lowest amount of debt first, before proceeding to the next loan.

In this post, we will look at 8 strategic steps to become debt-free, Amazing! right? The more of these steps you follow, the quicker you’d completely get rid of your debts.

1). Make a list of all your debts.

2). Create a budget.

3). Take on an extra job to create more income.

4). Evaluate the expenses that are causing the most debt.

5). Consider getting rid of any luxuries that aren’t necessary for living comfortably.

6). Decide on an appropriate repayment plan with your lender.

7). Set up automatic payments so that you don’t have to think about it every month.

8). Find out if you’re eligible for any debt relief programs through the government or other organizations.

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  Make a list of all your debts.

If you have acquired a lot of debts, it might become difficult to handle them, not knowing who you owe and how much you owe. Open up to all the debts you have incurred, figure out how much you owe.

Knowing all about your debt is important because you’d be able to come up with a working strategy to become debt-free.

However, getting all the information you need might be a bit difficult because most creditors and financial institutions do not easily disclose all the information to the debtors.

Therefore, it is important to keep track of your debts, as much as you can. Below are a few tips you could use to track down your debts;

1). Get your credit report.

When you borrow money, you are presented with a copy of the credit report. The credit report contains a list of the loan you have taken for the past 6 months.

Getting your credit report is an excellent step in figuring who you owe money to and becoming debt-free.

2) Analysing your credit card statement.

Review your credit card statement and figure out how much you owe currently, you’d be kept updated with the credit card statement.

3). Get in touch with your creditors.

After getting your credit report and credit card statement, the next step is contacting your loan creditors.

4). Check for any errors and sketch out a plan.

• Create a budget.

Create a budget, implement it, and clear your debts. Sketch out a budget that helps you stay within your means including the percentage of your monthly income that you can put off into paying your debts every month.

After creating your budget, you can be able to view your progress and quickly pay off your debts. Another thing is you could easily revise the budget you created.

A budget would help you make strategic decisions, that complies with your income, and you get a clearer picture when they are written of how much you can but towards repaying your debts.

Hence, create an updated budget, clearly showing your income, expenses, and the percentage you can channel towards clearing your loan.

• Consider acquiring side jobs for an extra source of income.

If you’re set on clearing your debt quickly then you should strive to increase your source of income. Try acquiring skills, monetize them and use the extra income to pay off part of the debt.

You could also take up a part-time job, or get some sort of a second job if you can handle it. Second jobs don’t normally work for everyone, however, if it works for you get it and forward the income towards repaying your loan.

You could also consider any skill you have to generate extra cash.

• Evaluate the expenses that are causing the most debt.

Track your expenses, figure them out, and cut off on some. This can save some money for some people who spend a lot. You’d never really know how much you are spending unless you start saving. No matter how little, save!

The expenses that ain’t important and incurring more debts should be cut off. Evaluating your expenses is important when trying to pay off your debts, you should be intentional with the exercise.

• Consider getting rid of any luxuries that aren’t necessary for living comfortably.

You could sell off expensive items to quickly clear off your debts. For example,  you have two cars, you only require one car to move about right? you should consider selling off the other car and channel the money towards repaying your loan.

You could save yourself extra thousands of dollars by selling off those luxurious items such as the extra car lying in the garage, you can use the money to pay off parts of your debts, it’d make a difference.

• Decide on an appropriate repayment plan with your lender.

Set up a structured pattern for paying your debts to your lender over a period sketched between you and your creditors.

Repayment drafts are usually structured on a monthly fixed amount which the repayment period can extend up to a decade. You will pay the same fixed amount every month until the loan and the interest rate is paid off.

• Set up automatic payments so that you don’t have to think about it every month.

Many lenders offer payment plans from 3-10 years without incurring additional fees or interest charges if it is paid off in full at the end of the term.

You could set up an automatic payment with your creditors, which means they are allowed to automatically withdraw a certain amount of money from your bank account or credit card to settle your debts.

It is used normally by workers to settle bills such as water and electric bills. However, an arrangement could be made to quickly settle off your debts.

• Find out if you’re eligible for any debt relief programs through the government or other organizations.   

Debt relief programs are programs designed by the government or any other organization to make it easier for the borrower to repay. However, to be considered for the program the are conditions that warrant eligibility such as bankruptcy.

It might entail reducing the interest rate, debt renegotiation, providing different terms among others.

• Conclusion.

Debts can lead to bankruptcy, when we don’t control them. Your debts rate can render you ineligible for government grants and other loans. Therefore, getting out of debts, saving for the future, making investment are ways to build a bright and secure future for yourself.

Being trapped in debts can be very stressful, they could cause harm not only your financial security but also affects your mental health and if you ain’t careful they might keep piling up. Hence, follow the above strategic steps thoroughly and you’d be debt-free in no time.

Therefore, the earlier you start paying off your debts, the quicker you’d have them paid off. Hence, use the above strategies and within few years you’d already be debt free!