Being in debt is no fun at all, and if your credit has been affected as a result, your life could be quite difficult right now. However, it’s crucial that you don’t ignore any debt you find yourself struggling with. Instead, you need to take the initiative and tackle your debt today using the below helpful advice to stop you accruing more debt, and see your way out of debt for good.
Stop debt in its tracks
It is all too tempting to get rid of one debt by getting another, but transferring a debt from one card to another, or getting out another loan to clear a previous one is only going to create further problems. Cut up your existing credit cards so temptation is clearly out of your grasp.
Prioritise your debts
Paying off the same amount for each debt may seem to be a logical step to take, but this is not the route to take. House or rent payments, court debts, car repayments, and certain bills should take priority over other debts. If you lose your home or end up in court over an unpaid fine, you will find yourself in all sorts of trouble. Make sure you pay your mortgage and rent, and other priority bills first.
Negotiate a lower interest rate
Some credit card interest rates are so high that it seems like it will take you forever to pay off even just the interest. Contact the creditor and ask for a lower interest rate, so you are paying more of your debt off quicker. You will need to know how the creditor for the particular type of card you have deals with this kind of request, and it is worthwhile visiting their website or contacting them directly for advice. The creditor is more likely to agree if you have a previously good payment history, but even if you haven’t, it is always worth a shot.
Offer creditors a lump sum
Some creditors will be happy to accept a lump sum in return for your debts being written-off. This sum can even be half of what you owe in some cases as creditors find the offer of a big payment more attractive than small payments over a longer period of time. Calculate how much you can actually afford to pay at once and contact creditors. You may want to ask what figure they will accept before you present your offer, as they may accept less than you think.
Create a realistic budget
When trying to get out of debt, it can truly help to have all your in-goings and outgoings in a spreadsheet. There are apps and websites which provide software to do this for you, or you can simply do it yourself. By creating a budget spreadsheet, you can assess the areas where you can cut back and see where things can be improved. Be realistic with the budget as it is no good lying to yourself when it comes to your debt!
Get rid of all luxuries
Unfortunately, when you are in debt, you need to be strict with yourself and the family if this is applicable. Takeaways, meals out, and cinema trips are out for the foreseeable, as are satellite TV and perhaps even the internet. It may seem extreme, but all these luxury extras are taking away valuable cash from your debt repayment plan. Take a good look at all the extra money you are spending on entertainment, trips out, and extracurricular activities and assess whether they are truly essential. See it as a short-term measure until you get yourself back in the black, and you may even be surprised at how soon you get used to living without these contemporary luxuries.
Earn extra cash
It may seem as if you are already working all the hours possible just to keep your head above water, but there are many ways you can earn a little extra cash. Look for working from home opportunities that you can do in your spare time, alongside your main employment. If you have a talent for DIY or cleaning, advertise yourself to help with odd jobs for a fee in your local neighbourhood. You can even earn money for completing surveys online, or by being a mystery shopper. There are several sites providing information about these types of jobs, and they can be done at times that suit your schedule. Remember, all this extra income will help towards ridding yourself of debt.
Sell unwanted items
Clearing your home of unwanted items is the perfect way to free up some space in your home and to earn some money while doing it. You can sell almost anything online, from furniture and clothes to vintage toys, jewelry, books and CDs. There are several online websites that allow you to sell goods without having to pay commission, and by stating collection only for larger items, you can save money on postage and packaging too. Take the best pictures you can of each item and give an honest description of the quality of the item you are selling. If you post items, make sure you do so promptly to ensure you receive only good reviews for your service so potential customers know they can rely on you if they choose to purchase your goods.
Cash out your life insurance
This option is one to consider if your debt is excruciatingly bad. Do your research though as cashing out a life insurance policy early can have tax implications. Alternatively, you can take out a loan against your life insurance policy, but this may have an impact on the amount left to any named beneficiaries when you are gone.
Last but by no means least, get expert advice regarding your debt. A credit counselling agency can help set up a payment plan and can even contact creditors on your behalf. It is a lengthy process, and it can take many years to be debt free finally, but you will be doing it via a reputable source that can offer essential advice.