5 proven strategies you should try to help get rid of debt

October 30, 2014

If you’re already struggling to make minimum payments on a loan or credit cards, these five strategies could be what you need to help you on the path towards becoming debt-free.

5 proven strategies you should try to help get rid of debt

1. Do a reality check

First, make a complete list of all your debts to get an accurate idea of the situation.

  • These debts include mortgages, credit cards, credit margins, all financing (such as personal loans, title loans on your vehicle and student loans), as well as purchase payment plans, i.e., "buy now, pay later".
  • You must take into account the money you’ll need to fulfill these terms when various loans mature.

2. Make a list

It's not enough to keep a list in your head. Write it down and make it tangible. Include in your list:

  • All interest rates.
  • The amount of each monthly payment (principal and interest).
  • The remaining balance to be paid.
  • The date you expect to make your final payment.

Calculate your total monthly debt repayments, then at the bottom of the page list the principal balance in one column, and the interest you’re paying on the capital in another column.

3. Seek advice from the pros

  • Ask to speak with an adviser at your bank or financial institution.
  • Replace your current credit card for one with a lower interest rate.
  • Consolidate your debts with a single loan or credit margin. The advantage is that you’ll only have to make one payment to cover all your debts and it usually comes at a lower interest rate. This will accelerate repayment of the capital and eliminate multiple interest charges.
  • Pay the debts in order of priority, i.e., from the highest interest rates to the lowest.

4. Tighten your belt!

Now that you're on the right path and can finally enjoy a sigh of relief, don’t reward yourself with retail therapy!

  • From now on, you’ll need to rethink your buying habits if you want to stay the course and achieve your goal of financial well-being.
  • You must eliminate the unnecessary and keep your expenses to a minimum. By drawing up a budget, you will easily see where you’re losing money; non-essential expenditures really add up.

5. Start taking concrete steps

  • No more restaurants, and that also includes lunch.
  • Minimize costly leisure activities. For example, opt for movie rentals rather than going to the cinema.
  • It’s not the end of the world if your wardrobe has to last you another year. Instead, host a clothing swap party and invite your friends, or visit vintage and thrift shops.
  • Be sensible with your groceries. Don’t be tempted to buy junk food, and rise to the occasion by choosing store brands over brand names.
  • Reduce alcohol and tobacco consumption.

Once you’ve successfully lowered your debt – and yes, you will succeed – you can reward yourself for your effort. Just try to avoid using a credit card at all costs! And remember...never spend your money before you have it!

Above all else, keep in mind that creditors tend to lend you an umbrella when it’s sunny out, but want it back when it rains.

The material on this website is provided for entertainment, informational and educational purposes only and should never act as a substitute to the advice of an applicable professional. Use of this website is subject to our terms of use and privacy policy.
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