Being in debt is one of the most stressful situations you can be in, and it can take a lot of effort to get out of. Here are some ways to do just that…
Getting out of debt is crucial for both your sanity and any future financial endeavours you wish to undertake. If you don’t want legal action taken against you by personal debt recovery lawyers and agents, you’re going to need some solid solutions.
In this post, we’re going to go over 10 of the best ways to get yourself out of debt and put this whole ordeal in your past.
What Can You Do to Get Out of Debt?
Some of these solutions might be quite difficult to carry out, but you should try your best to perform as many of them as possible if you really want to make it out of debt.
1. Check what you owe and prioritise
Debt often comes from varied sources, so the first thing you need to do is look who you owe money to and how much you’ll need to pay them every month. If you don’t have your most recent statements, contact your creditor to find out what you owe.
Once you’ve done this, prioritise your debts based on what you feel are the most important things to pay off first. For example, paying off your mortgage is important because if you don’t you could be evicted from your home.
2. Create a budget
In order to know how much debt you can afford to pay off, especially the priority debts, you need to figure out how much you’re actually bringing in. A budget will help you make better decisions and give you an idea of how much you can put towards your debt every month.
Having a budget also helps you find places where you could save money that could go towards paying it off. Then, you can put all the money you can aside every month and use it to pay off your debts in priority order.
3. Earn more money
If you’ve finished your budget and you still can’t save enough money to start paying off your debts, you might need to find new ways to earn money.
Obviously getting a new job or a raise would help, but if it isn’t possible then you can take on a side gig. Some fun examples might include walking dogs, using a certain skill you have to make money, and anything you can fill your extra time with to make extra cash.
4. Sell what you don’t need
At some point, you have to face the fact that your material possessions would be more helpful to you as cold hard cash. Everyone has things they don’t need; even if you use them a lot, you can always replace them later when you’re out of debt. You can easily exchange your valuables for cash like gadgets, jewely or even power tools in pawn shops and use the money to pay off debt or finance a small business.
This isn’t a sustainable idea because you’ll run out of things to sell at some point, but it will help you clear your debt in the coming months whilst you try to make money in other ways.
5. Stop creating debt
Hopefully the shock of your large debt, and the fact that you’re reading this post, means that you’re not looking to get into more of it.
Getting into more debt by taking out loans and credit cards will only create more problems. These new debts increase the payments you have to make and the strain on your monthly income. They’ll also throw your current budget out the window.
Living without credit cards when all your actual money is going towards paying off debt is hard, but it’s a reality you have to face until you’re out of debt.
6. Consolidate your debts
Debt consolidation is one of the most efficient ways to instantly clear it. It makes all the different companies you owe money to happy, and means you only have one loan to pay off.
The only issue is that you have to have a good credit rating to be able to get a low interest rate with a loan company. They might also only give you a very small loan that doesn’t cover the entirety of your debt.
7. Switch credit cards
In the spirit of consolidating your debts and reducing your interest rate, you could also try switching credit cards. Move your outstanding credit balances to a zero-transfer balance credit card with a lower interest rate.
These cards have a specific period where interest rates are at zero, so you have a decent chunk of time to start paying off the money. Pay as much as you can afford during this period so there’s less to pay when the interest rate goes back up.
8. Ask someone you know for help
It’s embarrassing asking someone you know to lend you money because you have to admit that you’ve made mistakes. When you’re in a lot of debt it’s easier to keep it quiet and ‘deal with it yourself’. That said, if there’s a potential to have your debts paid you should take it.
Ask a family member or a friend to lend you the money and agree to pay them back in instalments. The beauty of this solution is that they are unlikely to want interest on the loan they give you. You can even draw up an official contract to make the person feel more at ease.
9. Pay extra
Making extra payments each month on your debt will both shorten your payoff time and improve your credit score.
The quicker you can pay it off, the better. In order to get a consolidation loan or credit card you need a good credit score. This tactic is definitely recommended if you have extra money to pay your debt with each month.
10. Consider consumer credit counselling
If you’ve tried everything above, and none of it has helped, then you should consider speaking to a credit counselling agency.
These agencies can help you work out a debt management plan with your creditors. These plans usually involve lower monthly payments to your creditors and giving your monthly payments to your counsellor who will distribute it to them.
Ready to Pay Off the Debt?
In this post, we’ve shared the best ways to get yourself out of debt, from budgeting to hiring a credit counsellor.
There are many other ways to try, but most of them are centred around lowering interest rates and finding enough money to pay off your debts. Hopefully this article has been useful to you, and good luck!