Getting into debt is not usually something you plan for; you may have an emergency fund but sitting down and planning how to pay off debt may not be something you have considered. Read the following strategies for getting out of debt.
It’s all well and good to recognise your debt and want to get out of it, but to take an effective approach to getting out of debt, you need a thorough and highly-detailed plan. It’s not enough to simply say you’ll pay X amount off by date X; if you were capable of having that little planning and paying it off, you wouldn’t be in debt in the first place. You need to be smart and take into account all the factors that will help and won’t help to recover the money you owe. Consider:
– How much you owe and to who/where
– Any interest accumulated that also needs to be paid
– Any fees incurred as a result of being in debt
– Incoming cash flow
– Savings you have to help pay off the debt
– Strategies from your bank or whoever is owed the money to repay the debt
– Upcoming expenses
If you have multiple debts, adopting the debt-snowball strategy to pay these off is a sound plan, particularly if you have accumulated these debts through something like credit cards. The debt-snowball strategy involves paying off your smallest debt first, and your larger debts you pay off at a minimum rate until all the smaller debts are taken care off.
Create new revenue
The more money you owe, the more money you will need to repay this debt. There are so many ways to make money these days; if you can afford the time, it may be fruitful to invest time into creating new revenue. Focusing your attention on somewhere other than where the debt was created will also be great for your mental health.