Here are some of the top tips you can use to get rid of your debts quickly:
Prioritize your debts, starting with your most expensive debts where you are paying the highest interest. This typically includes credit cards and store accounts, to less expensive debts like your mortgage.
Short-term debts are typically accompanied by higher interest rates, which means they increase and become a lot more expensive relatively quickly, which is why it is always better to tackle these first. A creditor has a limited amount of time to raise any debt issues, after this it becomes a statute barred debt – find out here all you need to know.
Try To Renegotiate With Your Creditors
If you are starting to struggle with your repayments, rather than defaulting on these payments, go to your creditors or your bank and ask if you can renegotiate your debts. Never stop paying your debts since this could lead to dramatic legal implications. Your creditors may be open to accepting smaller payments and extending the period to pay your accounts back, which should bring your monthly costs down.
If you really need to, you may want to consider renegotiating your bond by taking a “payment holiday”, asking your bank for an arrangement where your payments are reduced over a few months, or even extending the term associated with your bond. This could help you to channel this extra cash flow into getting rid of your short-term debts before you pick up your repayments again.
Cut Back On Your Expenses
Sacrifice some of your comforts like subscriptions, luxury food items, or movie tickets, and rather put the money you have saved into repaying your debts. You could also consider renegotiating any of your short-term insurance policies for more affordable monthly premiums.
Look For Ways To Bring In Extra Money
You could sell unwanted assets or items you no longer need or use such as old jewelry, electronics, or clothing. Use the money to pay off your debts. If you are already financially struggling, don’t underestimate any opportunity to bring in extra income.
Dip Into Your Savings
If you have any money saved, it would be a wise idea to use it to get rid of a few of your debts. Your debts will compound and grow a lot faster than the money you have in a unit trust or savings account. However, it is very important to carry on investing or saving once you have settled your debt.
After a home loan, a car is typically the next largest debt. If you start to struggle, downsizing might be the answer. Trade in or sell your car for a less expensive, smaller model to relieve a bit of stress from your monthly budget.
Keep Communication Lines Open
If you are struggling, you should make your family and partner aware of the financial situation. In this way, you can deal with and come up with answers on how to change a few spending habits together. You shouldn’t feel ashamed to admit there is an issue, and facing your reality is one of the first steps to finding a solution.
Honestly communicating with your partner and older children can allow your loved ones to help you with a solution, and it could also impart valuable lessons on how to manage money which could assist them when they are older.
If your kids are older than 16 years, you could ask them to start contributing financially by getting part-time jobs during the holidays and over weekends.
Debt Consolidation Agency
Debt consolidation agencies specialize in packaging debts and dealing with creditors. However, make sure the agency is well-known and reputable well before you decide to sign up. It is also important to keep in mind that they will charge you fees.