Debt & Credit

Get Out Of Debt Fast Using These Seven Proven Tactics

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Nothing is more fulfilling than living life with the confidence of not owing anybody anything. Debt is something that can make you feel very depressed. Many people are living paycheck to paycheck with a minimal left in between due to debt issues, with an average of $15,000 on debt in the United States alone. It’s possible to go from liability to a debt-free life, but you have to be smart on the ways you use to get out of debt.

Here are seven proven tactics that you can use to clear your debt and continue living a debt-free life.

1. Know Your Debt Position

Know your current debt position then work on a plan to get out of it. You may feel a bit of fear or even guilt attaining this knowledge but overcoming these feelings and taking action is very crucial if you are going to make it out. The best and most recommended way to understand your position is using a spreadsheet for records. Loans and credit cards should be part of this record. Credit card companies tell you just how much you owe and the APR applicable so this should be part of your history. 

Knowing what debt you are in might be depressing at first, but you must see the whole picture clearly when looking at your spreadsheet. If in loans, get your lender to tell you exactly how much you owe them as well. Just keep in mind that a taking a step to clear your loan, no matter how small, is a step towards the right direction and if you think you have a big debt problem, remember there are people out there whose situations are worse.

2. Take a Look at Your Income

For you to get out of your debt problem, you need to pay a bit more than usual to clear your loans and credit card balances. Plan on how much you can manage to pay comfortably with the current income you are earning.

If what you are making isn’t providing the needed scope to help you pay more, work out more ways to increase what you generate monthly. Find a way to get a raise at your job or even promotion if possible. If not, find a way to work another job or part-time business that you can conduct at the comfort of your home. The additional income will surely help you get out of debt fast.

3. Make the Right Decisions

What making the right decision means is you have to prioritize your debts in order of the one that is gaining interest fast. Make a plan of tackling your debt by the law of the one gaining most interest to the one earning least. With this, you are most likely going to settle your credit cards first.

 If you happen to have two, check the one making more interest and settle that one first then work on the other. Continue paying the minimum balance on the one with a less interest rate until you are clear of the one with a higher one, and then increase your amount until it is also settled. Paying more than what you need to is what debt reduction mostly entails.

4. The Debt Snowball Method

Here, you start with your smallest debt and make your way up the ladder. You should identify your smallest debt and secure ways to clear them as fast as you possibly can. After that, move to the second smallest one and clear that too. This comes up with a snowball effect, where you will have a more massive available income to help you tackle the larger ones.

You must, however, keep paying the minimum payments on your other debts while settling the specifically targeted ones. The psychological gain here is vital in that as you keep settling the small loans, your mind subconsciously registers them as wins and will keep you motivated to eventually clear them all.

5. Spend On the Essentials Only

Here you have to check on your spending habits. Check on how often you eat out, or the membership subscriptions you have and don’t use, or the expensive habits you have as well and cut on them. In as much as you only get to live once, you don’t have to spend money on things you don’t need. Create a spreadsheet and record everything you need to pay on monthly. You need to spend on things like grocery and utility bills. Later create a budget and push yourself to the limit to abide by it.

6. Sell Stuff You Don’t Need

If you don’t have a hoarding problem, dig up on the things you have and don’t need anymore. Polish them up and have a garage sale. Everyone has things they don’t use anymore and are still of some value. Why not sell them to earn yourself a bit extra cash and help yourself settle your debts? You might have a goldmine and don’t know until you decide to do the digging.

7. Remove Temptations

The ideal way to get out of loans is by actually getting rid of the things that grant you access to these debts. Do you have a credit card? Stop using it as soon as possible if not immediately. If you still have them, find a way to get rid of them so that you can avoid the temptations of actually using them.

You don’t necessarily have to cut them up. You can give them to a friend or relative for safekeeping. You never know when you might have an emergency and need to use one. You never know what the future holds.

If you are willing to get out of debt fast, then you should take immediate action. Make a spreadsheet and record your current debt position, later tackle the large ones and make your way down or use the snowball approach whichever you are comfortable with, and lastly raise extra cash in whatever means available to you.

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