Debt is an extremely normal part of anyone’s financial life. However, we can’t deny that having debt feels like a nerve-wracking experience as well. It’s frustrating to know that we have dues that can impede our savings. However, knowing that debt is a regular occurrence in our lives means we can experience debt relief as well. Here are some necessary things you need to know about debt relief and some easy ways to start achieving it.
Study, Assess Your Debt
Sometimes, it’s all about a matter of looking at your debt and planning accordingly. You can’t correctly understand just how much debt you have and how you can pay it without looking at everything properly.
- Try to collect all your account statements within a specified period of time. Search online or call creditors to inquire just how much you owe them and if there are interest rates. Also, ask how much is the minimum pay requirements for each kind of debt you owe. Place everything on a spreadsheet to view accounts at once.
- If there are questions about your debt that you need to be clarified, always feel free to ask your creditors. The more you know about your debt, the easier it will be for you to formulate the right strategy.
Remember, the first stage in having debt relief is to know your situation first. This means assessing all your debt properly.
Pay Above, Beyond the Minimum
It’s important to understand that creditors will try to make more money off you if you only plan to pay the minimum each month. This is because interest stays the same, and this is where the difference is. If you pay more than the minimum, not only will the total debt decrease, but the interest will be lowered as well.
- Try your best to pay above the minimum to decrease the time you need to pay for your payments. The less time you have, the less you will have to pay in the long run.
- Have a plan to get extra money for debt payment, gain access to those funds and make additional payments. The more you pay, the lesser debt youwill have in the long run.
Try to Focus on the Lowest or Highest Debt
When you have a list of unsettled dues, things can sometimes get a bit overwhelming. To keep things in order, try to establish a debt priority. You can choose to focus on the lowest debt then followed by the highest one, or vice versa. Both methods can work depending on your financial situation. Take a look at these two scenarios:
- The debt snowball starts by identifying which of your debt has the lowest balance and focusing on this. The goal here is to remove this debt as quickly as possible. The quicker you do this, the more extra money you will have to focus on other debt. The trick is to realize that the “small” money you’re going to pay for the lowest debt will be used on other debt, given the lowest debt has been paid. This tactic “snowballs” until you get a lot of “extra” money to pay off the larger
- The debt avalanche method is the opposite, where you choose to work with the highest interest rate instead. This will, of course, take a bit of time, but it will eventually decrease the total payment you have to pay each month.
Some people rely on the debt snowball because it’s a faster strategy to get extra money for their other debt plans. However, the avalanche system will probably help you save more money in the future – of course, provided you are willing to take your time.
Extra Income, Extra Budgeting
Sometimes, the best way to make more money for your debt is also to gain extra sources of income. Here are some methods to do these:
- Try to ask for a raise from your boss. Some people are afraid to leverage on their abilities as an employee, and forget that they can actually try asking for an increase. If you explain your situation carefully, your boss may give you a raise – or give you tasks that can qualify as a raise.
- You can also try selling older stuff that you’re not using. This will help you understand the inherent value of objects around you as well, helping you budget more efficiently when buying new things.
- You can also try to get a part-time job to obtain extra income.
At the same time, you should also try to budget more and spend less. You should start becoming smarter as to how you balance your monthly expenses and things you do for leisure. There are ways for you to pay less by buying alternatives, opt for those options.
If the above items are any indication, then debt relief is, in fact,a possible thing. It just takes a lot of time and effort on our end. It may feel as if we’re not making any progress in the beginning, but if these tactics are paired with a good financial strategy, then you’re on your way to a brighter financial future.