Are you neck-deep in debts? Are you thinking of ways by which you can pay them back? Then you are not the only person to think like that. Many people like you are considering on the same lines. Before you begin to pay the debt, you must first identify what kind of debt do you have? Is it student loan debt or credit card debt or mortgage debt or some other form of debt? Next, determine the amount that you have to pay for clearing the debt. If you can understand the kind of debt that you have and the amount of money, then you can come up with a customized plan to suit your needs.
Top Ten Ways to Clear Off Debt Pay Off Debt:
In this article, we have compiled the top ten steps with the help of which you can easily plan your debt clearing strategy.
Stop Your Credit Card Expenditure
The best way to stop credit card debt from accumulating is by removing the credit cards from the wallet or the purse. It is better to keep them at home before you go out to purchase any product from the shops.
Until and unless you have your finances under complete control, stop using the credit card for making purchases. You may earn cash back, rewards but it is better to control the spending so that the debt amount does not increase.
Creating a Budget
The best way to clear off the debt is by making a budget. This is one of the most critical steps that you must follow to solve the debt problem that you are in. Since you overstepped the budget initially is also the reason why you are in debt-ridden. So, making a budget can be an excellent way to keep a check on your expenditure.
There are different finance managing tools available in the market that you can use for making the budget. Or else you can use the Excel spreadsheet to keep track of your income and expenditure every month. You can then check to see in which areas you can make cuts in the expenditure. Get a hold on your expenditure or else, the debt will be even more significant in the future and lead to unnecessary stress.
Pay More than the Minimum Balance
If you want to make a dent in the amount of debt, you have to pay more than the minimum balance that you have on the credit card statements for each month. Spending a minimum of two to three per cent of the compensation that you need to pay will only enhance the debt payment process. What can you do then to shorten the process? It is better to pay the debts in a weekly manner. If you pay weekly, you will be paying more than the amount that you will be paying monthly. This will lessen the budget amount.
Taking Advantage of Balance Transfers
Some people have high-interest credit cards with a balance that you can pay in a few months. Financial experts recommend that one must move the debt of the card to a card with a zero-interest balance transfer scheme.
In this case, you will have to pay the debt back before the balance transfer is expired. Otherwise, you will get an even higher rate of interest. Doing this process carefully will only help you to save a massive amount of interest.
Paying the Most Expensive Debt First
You can sort the different credit cards that you have according to the interest rates. Choose the highest ones first. After you pay the amount on the highest interest charging card, you will be able to increase the amount on the credit card that has the highest annual percentage rate among all the cards. In this way, you will need to pay a minimal amount for the rest of the credit cards.
Put Work Bonuses toward the Debt
When you have a debt, the most important thing on your mind should be to pay off the debt. You may receive a bonus at work at any time of the year. It is better to keep that money for paying off the debt rather than spending it on holidays or for making any expensive purchases. Fixing the financial problem is more vital than going out for holiday purposes or buying branded clothes or jewellery. If you do not clear the debt, it will only add to your tension and stress.
Sell the Unwanted Gifts and Household Items
Do you have any gifts or wedding presents in your home? Pick the items and sell them on e-commerce sites like eBay. Also, ensure that you list these items at a reasonable price. One must also take good quality pictures and present it with an eye-catching headline for the product.
The description of the items must also be made equally interesting. The profits that you will reap from the sales must be used to clear off the debts. This is a simple way of making use of the resources at home to clear off the debt.
Delete Credit Card Information from the Online Stores
Many people purchase many things online from one fixed retailer or e-commerce site. As a result, your credit card information might have been stored in that particular site for ease of operations.
This also makes it very easy to charge someone for the things that they have not purchased. Hence it is better to clear this information. So if you want to pay for a service, then use a debit card from a right credit card service provider. You can link the card to the account and then pay for the assistance from the retailer.
Changing Your Habits
Changing your habits is one right way of saving money and paying off the debt. The spending habits of a person led him/her to gather such debts. It is better to jot down the amount that an individual spends daily, weekly, and monthly.
In this way, you will be able to understand the extra spending that you are doing. If you stop those additional spending, then you will be able to spend a considerable amount of money. For example, you might buy lunch at least three to four times a week. Instead of that, you can carry lunch from home and save money easily.
Reward Yourself When You Reach Milestones
Be positive in your outlook when you pay off the debt. Do not think of it as a liability but rather take it as your responsibility. In this way, you will be motivated to clear the debt faster. Whenever you reach a milestone of any kind, be ready to reward yourself for the achievement.
This is an excellent way to keep you rightfully motivated. Maintain an excel sheet to see the changes in the finances happening after you have cut down on certain expenses. In this way, you will find that your expenditure has decreased and you have reached a particular milestone for that week.
Clearing off the debt is the best thing you can do to maintain adequate finance. Following these simple methods will be helpful and effective in bringing good changes in your finances and clearing off the debt as early as possible.