With the current COVID 19 pandemic, the question is how they can get rid of debt as some people are experiencing financial difficulties. Many people tell us how they would like to pay down their entire debt, but unfortunately, they’re not quite certain how they can go about it.
We all know that getting rid of debt is not easy but it is possible regardless of whether you have no cash, no knowledge, and no assets. It is quite easy for you to whine up a lot of loans/debts before you realize it. You could be having medical challenges, your working hours may have been cut short or you have possibly been laid off and it resulted in you making thousands of dollars on loan/debt.
No matter the reason that forced you to start living off debts/loans or credit cards and you are in a dilemma on how you can successfully pay these debts and become debt-free. If you are wondering what to do, this article will be of benefit!
You could have been anticipating that things would get back to being normal soon enough and you will be able to clear off the debts on your credit card. Hopefully, that is the case, but the truth is the world is full of people that needed to be working towards getting out of debt before the Coronavirus hit the world.
All of us are going to have challenges moving forward. This is usually the case after any natural disaster; you could be having difficulties securing a job, or your working hours have been permanently cut short. On the other hand, maybe the debt balance on your credit card has gotten so huge that you realize that even if you get a job with a steady income, you will hardly be able to pay off your debts and cover your normal monthly bills.
There are a couple of things to enable you to pay off debt on your credit card. Firstly, you need to accept that you will get nowhere if you just keep making the minimum monthly payment, you will need to start making double the payment to start seeing a significant reduction in your debt balance.
For some people who are determined to pay off their debts, find areas in their monthly budgets, where they can cut down so they can pay their debts. Is it necessary to always purchase lunch when at work? Do you need expensive lattes?
There are a couple of luxuries that you can forfeit in other to free up some cash towards settling the debts on your credit car. If this is impossible for you, there are a couple of alternatives for you.
Renegotiate Your Loan
More often than not, you can renegotiate for a much lower interest rate or request for loan extension of the loan time, this would lead to smaller, more manageable payments for you.
Negotiating with your credit card company or bank is easy. The majority of credit card companies and banks will offer to work together with you to set up a much more friendly payment method/schedule that will work for you. All you need to do is truthfully explain your condition to them and be honest about what you can do and what you simply cannot.
Pay Off the Most Expensive Debts First
One of the ideal methods of getting out of debt is to make an extra payment on the debt which has the most interest rate and make the minimum payment on debts with smaller interest rates. This strategy is commonly called “The Debt Snowball” and I cannot stress how important it is for you to understand this concept and apply it if you are serious about getting out of debt.
If your most expensive debt is settled, you should take all the money you were paying on that debt and use it to start paying off the next most expensive debt. Keep using this method to pay off all your debts until the least expensive of all your debts is left. This method of debt payment will quickly get you out of your debt hole.
Debt consolidation is a method by which you pay off several small debts/loans using one large debt/loan with a much lower interest rate. This method is quite effective because it helps to lower your monthly installment payments and it helps to settle your debts much faster.
Debt consolidation also makes it much easier for you that you only have to worry about one payment instead of worrying about many small payments. Nevertheless, for this to work, you need to make sure you have included all your outstanding debts/loans and then avoid accumulating more debts/loans. Normally you need to chop your credit cards and give full concentration to the payment of your debt/loan.
Pick Up a Side Hustle
Please note I didn’t say a “part-time job”. I said a side hustle and there is a huge difference. Picking up a side hustle/job will amplify your earnings and in turn, speed up your efforts towards settling your debts/loans. Almost everyone has a skill or talent that they can easily monetize, whether it is mowing the yard, babysitting, being a virtual assistant, cleaning houses, or buying and flipping items on eBay.
With the existence of sites like Upwork.com and TaskRabbit, almost everybody can find a method by which they can earn extra cash. You can find out more about both Task Rabbit and Upwork in dozens of making money online articles found here at Save Your Bucks.
The ultimate goal will be using this extra cash to pay off your debts right away and become debt-free. If you want to learn how to join the flip economy and make money buying and flipping merchandise on websites like Posh Mart, eBay, Amazon, StockX, and others. Then, you will find detailed guides and videos on exactly how to make money in the flip economy at Online AuctionU.
SELL Everything You Don’t NEED
Selling stuff you don’t use is an effective way of generating quick cash. With online marketplaces like OfferUp and Facebook MarketPlace, you could almost liquidate everything you own in just a matter of days. If you have never participated in Facebook MarketPlace, it is something everyone should experience to start to understand the liquidity of items you no longer want or need. This article is a good place to start “How to Sell Anything on Facebook MarketPlace”.
Many people have valuable possessions lying around that we do not often make use of. Have you considered selling your extra belongings to reduce your debts? If your neighborhood allows a garage sale, which is normally the easiest and cheapest method to offload your unwanted stuff for profit. Alternatively, you can decide to sell your stuff via consignment shops. Many sellers online or on various online marketplaces.
Consider a Balance Transfer
Should your credit card company refuse to budge on your interest rate? It may be advantageous to have a look into a transfer balance.
You can get almost 0% intro for up to 17 months. However, a balance transfer charge is applicable for this privilege. You can easily pay off your debts if you have a zero credit card balance during that period. Moving your balances/funds to a card can save you; lots of money on interest while concurrently assisting you to settle debt faster. If you have not investigated this you should, many companies are offering various promotions at any given time.
Drop expensive habits
If you are in debt and you are always failing to reach your targets each month, assessing your habits could be the ideal idea yet.
Nonetheless, it seems logical to assess how you spend money daily. In doing so, you can assess if those expenditures were worth it – and finally, figure out new ways to reduce spending or get rid of the frivolous spending.
If drinking alcohol or smoking is your expensive habit, that is a logical one; you just need to make the goal to quit and don’t stop until the goal is completed. Smoking and alcohol add no value to your life other than becoming a barrier between you and your ultimate long-term goals.
Should your expensive habit be daily restaurant lunchtime visitations, fast food or daily latte? The ideal strategy to handle this is reducing the frequency with the ultimate goal of stopping or replacing these expensive behaviors with less expensive behaviors.
NOTE! Only consider bankruptcy as a final resort. Ensure that you have attempted all the methods mentioned above and you still fail to pay off your debt, only then should you consider bankruptcy.
Bankruptcy is a process where the court declares you incapable of settling your debts and you will have to relinquish all your assets. Your creditors will have to do with whatever the court decides to award them.
You will have to give up (relinquish) all your belongings and assets, not just cash. This includes your cars, jewelry, houses along with anything else of value when monetized. You will also be denied access to further credit for many years to come. No mortgages, no loans, no credit cards. This therefore certainly is not the best way to get out of debts if there is another way out of it.
Finally, it is quite easy to continue to live in debt provided you accept the reality of your exact situation. However, once disaster strikes, you will get the exact picture of the entire situation in a flash. The paycheck-to-paycheck lifestyle can also be sickening. As such, you may look for methods to get rid of the crushing weight of those monthly payments.
Irrespective of what type of debt you incurred, be it credit card, car loans, student loans, or anything else – there is always a way out of it. It might take a while before it happens, but be sure that a debt-free future can also be yours as long as you plan towards it and also follow that plan to the letter.
Whatever might be your ultimate plan, any of the above strategies can surely help you become free of all your debts and loans. The faster you can become debt-free you can begin living the type of life you desire.