A good number of people here in the UK spend more than they earn every month. And it is due to this reason why we have become a nation in debt.
It seems that everyone is being followed by credit card debt, car loans, student loans and other kinds of loans not listed. Not to mention, at times, disaster does strike at any time. For instance, you might take on a loan to cover medical expenses or an unexpected loan repair.
All in all, this is part of life, and it has to keep ongoing. Are you tired of living from paycheck to paycheck? Do you seek financial freedom from personal debt consolidation and all the struggles associated with it? Worry not, we have rounded up 5 tips on how you can get out of debt.
1. Pay more than the minimum payment
Did you know that it is possible to pay off a debt for all your life? For instance, let’s take an average credit card balance of £15,000 with a 15% interest rate. In most financial institutions, the minimum wage can vary from £550 to £650. Paying at this minimum rate will take you more than 13 years to clear it off.
This is why you should pay more than the minimum rate. Whether it’s a student, credit card or personal loan, make sure that you pay more if you can afford it. As a result, you will save up on interests and fasten the repayment process.
2. Use the snowball method
This is a strategy that has helped dig a lot of people out of debt. It entails the payment of debts starting with the ones with the smallest balances as you go up. Many are times people find themselves with lots of debts with low balances. The moment you start clearing out the smaller ones, you will be able to pay them off faster and then move to the bigger ones.
3. Find an extra source of income
By the look of things, can your main job get you out of debt? If the answer is no, then you have no alternative other than seeking an additional source of income. Fortunately for you, today, there are a lot of side hustles you can engage in. Research on ways to make extra income. The money you get from your side hustle can be used to clear the debt. An excellent example of a side hustle is food delivery driving. There is always work, you can make your own schedule, and you might get tips on top of your salary. You are paid by order, so the more orders you take during your shift the more money you will get. Thankfully with the software improvements, you can find a shift grabber easily, you can request shifts, exchange shifts with other employees, and be updated when drivers are needed.
4. Create and adhere to a strict budget
If you really want to get out of debt. You should cut on expenses and direct that money towards repaying your loans. The definition of cutting costs differs from one person to another. You should, therefore, find what works best for you. If that is using an IVA then stick to repayments. Are you asking, what is IVA? Then read up about it and ensure that you follow it to the letter.
5. Sell what you don’t need
This is one of the best ways for you to get money to pay off debts. You can host a yard sale and sell anything that you no longer need or use. Most people tend to have lots of stuff lying around that they no longer use. You can sell such items and use the money to pay off debts.
Getting out of debt requires determination, hard work and patience. It isn’t something that you can do overnight, not unless you win the lottery. Anyway, by following these 5 tips, you can get out of debt faster.