Six Tips to Getting Out of Debt
Getting into debt is easy enough to do but getting out of debt can take a bit longer.
It is possible to erase debt with a bit effort and a lot of discipline.
So what are some of the solutions to getting rid of your debt? Follow these six tips.
1.
Record all of your liabilities.
Draw up a table using the following headings along the side column - credit card name, personal loan, hire purchase, mortgage and any other debt.
Along the top record the headings of: interest rate, account balance, due date of payment, amount of the due payment and any comments.
2.
Complete a budget to ensure that your outgoings are covered by your income.
Make sure you include the minimum payment on each of your debts.
Your budget will also need to include your regular monthly expenses such as your utility bills and insurance payments as these must be covered each month.
3.
Once you know that your income will indeed cover your expenses allow an increased payment to the loan with the highest interest rate to get rid of this debt first.
This is likely to be the credit card or perhaps the hire purchase debt.
By making a higher repayment to the highest interest account you will be reducing the total overall interest paid.
As your debt is eliminated do the same with the next highest interest rate debt.
4.
After your credit card has been repaid make sure that you pay the balance in full and on time each month.
If you have completed your budget correctly you should have the funds available to cover the monthly payment.
5.
Beware of hire purchase as sometimes the interest is added to the total debt using a flat rate rather than calculated on the daily balance.
If a flat rate is used find out if you will get a refund if you pay the loan before the expiry of the term of the loan.
6.
Pay any pay rise, tax cut, bonus or unexpected windfall into your loan accounts and do not be tempted to spend it.
This will help you reduce your debt sooner.
There will be other steps you can take to erase debt but you need to use the system that is best for you.
Whatever your approach, getting out of debt is the objective you set out to achieve so make it work for you.
It is possible to erase debt with a bit effort and a lot of discipline.
So what are some of the solutions to getting rid of your debt? Follow these six tips.
1.
Record all of your liabilities.
Draw up a table using the following headings along the side column - credit card name, personal loan, hire purchase, mortgage and any other debt.
Along the top record the headings of: interest rate, account balance, due date of payment, amount of the due payment and any comments.
2.
Complete a budget to ensure that your outgoings are covered by your income.
Make sure you include the minimum payment on each of your debts.
Your budget will also need to include your regular monthly expenses such as your utility bills and insurance payments as these must be covered each month.
3.
Once you know that your income will indeed cover your expenses allow an increased payment to the loan with the highest interest rate to get rid of this debt first.
This is likely to be the credit card or perhaps the hire purchase debt.
By making a higher repayment to the highest interest account you will be reducing the total overall interest paid.
As your debt is eliminated do the same with the next highest interest rate debt.
4.
After your credit card has been repaid make sure that you pay the balance in full and on time each month.
If you have completed your budget correctly you should have the funds available to cover the monthly payment.
5.
Beware of hire purchase as sometimes the interest is added to the total debt using a flat rate rather than calculated on the daily balance.
If a flat rate is used find out if you will get a refund if you pay the loan before the expiry of the term of the loan.
6.
Pay any pay rise, tax cut, bonus or unexpected windfall into your loan accounts and do not be tempted to spend it.
This will help you reduce your debt sooner.
There will be other steps you can take to erase debt but you need to use the system that is best for you.
Whatever your approach, getting out of debt is the objective you set out to achieve so make it work for you.