Debt can be a terrible thing. If it is allowed to build it can stifle you under the weight of interest payments and may lead to you being unable to take advantage of other opportunities in life.
This means you should always be looking to clear your debts as quickly as possible. In doing so you save money in the long run, as you don’t pay out as much in interest, plus you lower the risk of your debt affecting things like your credit score, which removes the obstacles you may face when exploring other opportunities in life.
The following are a few useful tips that will help you to clear your debts and take more control over your financial future.
Be Honest With Yourself
The major problem that many people face when confronting their debts is not being honest with themselves about the scale of those debts. Instead, they may choose to rationalize not paying as much as they perhaps should because it offers them more money to spend right now.
You should be honest with yourself about your debts, the limits they are placing on your life and the effect that allowing that debt to build could have on your future. Coming to terms with that knowledge is the first step towards confronting your debt and doing something about it.
Take Stock Of Your Expenses
Exactly where does your money go every month? You need to be able to answer that question so it is a good idea to take stock of your expenses and consider where you may be able to cut back so you have more money available to clear your debts.
This doesn’t mean that you need to cut out everything in your life outside of bill payments. Just take a closer look at where you spend money and put serious thought into how much you might miss some of the non-essentials if you put that money elsewhere instead.
Reject APR Increases
If you have pre-existing debts on your credit card, you may be contacted by your bank to let you know that they are going to increase the APR further, meaning they will be able to claim more interest on that debt.
You don’t have to allow this to happen. You can contact your bank to reject the APR increase. While this will mean that you can no longer use your credit card for new purchases, it also means that your interest rates will stay lower, allowing you to focus on paying off the debt without having to see it climb further than it should.
Be Wary of Payday Loans
The payday loans industry has exploded in recent years, mostly because it offers people quick cash to help them pay off immediate debts. This may seem like a good idea at first, especially if you are in financial trouble, but the issues that can come from a payday loan can be extensive.
These loans tend to carry high interest rates that can quickly lead to you paying back far more than you borrowed. If you miss any payments you may also have to accept additional charges. In some cases a small payday loan can quickly put you in more financial trouble very quickly.
While I’m not saying avoid them entirely, make sure you explore other options first. Contact your lenders to let them know about any issues you may have with a payment ahead of time. You will often find that they are willing to arrange something to help you. If you do go for a payday loan, make sure you are able to pay it back on time and at the rate agreed to keep interest to a minimum.
Pay More Than The Minimum
It may be a simple tip, but it is one that a lot of people don’t follow. If you are able, you should pay more than the minimum payment, particularly on high interest debts, like those generated through the use of a credit card.
In doing so you clear more of the debt quicker, which reduces the amount of interest that can be added to it. Furthermore, only paying the minimum on your debt could suggest to future lenders that you struggle with repayments, which could have a negative effect on any future loans you need to take out.
Financial planners and advisers exist to help you with any issues that you have related to debt. They will be able to help you plan out your income and expenditures so as much money as possible is dedicated to clearing your debt.
A lot of people avoid seeking professional help because of the cost involved, but this is usually paid back in spades by the money saved. You may even find that free financial advice is available to you, depending on where you are in the world.