Most of us need a little help with money to get a roof above our heads, wheels beneath our feet and everything else in between. We don’t have so much money that we can afford everything, so we need to borrow. Since the money is not ours we have to pay it back as well and this is when the problem arises. When you have a steady job, your salary is enough to pay off all mortgages and loans over a period of time; you are in a great position.
The problem arises when income doesn’t suffice and this leads to accumulation of debt and all the problems that come with it. If you are burdened with debt, here are a few ways by which you can get out of debt fast.
How to get out of debt fast – in 6 simple steps!
1. Accept that you are in debt: The most important part of getting out of debt is realizing that you are in it. This usually happens quite late because we keep thinking that we can pay it off, if not today then tomorrow. The problem arises when that tomorrow never comes and one fine day you wake up to see that you owe much more than you ever think you can pay back. It is important to keep constant note of your bills and figure out how much you have, how much you need to spend and how much you must repay.
2. List down the debts you have: It is important to start analyzing your situation and accessing the amount of debt you have. For example, if you have a car loan to pay up, mortgage on a house and credit card bills, list them down. Calculate how much you would need to pay up all together and make a plan about how you are going to do it. Keeping your income and basic expenses in mind look at how much money you can keep aside to repay the debts.
3. Start cutting back on small things: Once you have realized that you are in debt and you need to pay back, you should start by cutting back on small unnecessary expenses. Understand what is important for you and your everyday life; and plan on how you are going to spend the money. Car loans, house mortgages, gas, grocery and the like are important. To get rid of debt fast cut down on over indulgence in clothes, dining out, DVDs, online stuff and gadgets. You will be surprised to see how much you end up saving on these things.
4. Re-negotiate the interest rates: One of the best ways to get out of debt is by renegotiating the interest rate with your lenders. Imagine how much you would end up saving even if the interest rates were cut by even a very small percentage. You can either do this yourself or get the help of a recognized debt consolidation company to do it for you.
5. Pay more than the minimum: If you have a steady income and you can afford to repay more than just the minimum amount… do it. Most of us think that we can pay back the minimum for a long period of time, but if you are in debt, it is better to clear it off before it becomes too late.
6. Empty your savings account: This does not mean that you need to remove every penny from your savings account. Keep a bare minimum that you might need in case of an emergency and cash the rest out. The math to this is simple. You are paying usually about 12% to 18% on your debts. The money in your saving account would merely earn you half of that interest rate every year. The smart thing to do would be to take money out of your savings account and clear as much debt as possible and start saving again.