What is the best way to pay off debt?
If you have not heard about money problems, you probably have been living in a cave. Owing money is probably one of the most common financial trouble that people are going through these days. And the reality is, that many of these people keep on repaying their bills their whole lives.
That only shows that paying off bills is definitely not an easy thing to do. If you are looking for a magic trick, a one-day fix or a special formula that can get you out of your financial trouble in no time, you may not like what the reality actually is.
What is the best way for dealing with debt?
Despite what many loan lending companies are advertising, the truth is that there is no such thing as ‘the best method for paying off outstanding bills’. If there was such a financial tool, then the number of people in debt would not be rising.
It is time to get real
There is simply no bulletproof method for paying off debt that can work as a some kind of miracle for every single financial situation. You need to understand that the best way to pay off debt is the way that is best suited for your specific needs.
If you cannot identify which is that way, we will give you some ideas and steps to follow. In case you are not working with a financial expert who can figure out the best way to pay off your financial obligations for you, you would need to do that all by yourself, that means that you would need to try a few things before you get thing right.
What can you do to improve your chances of reaching debt freedom?
You can actually do a lot of things. Depending on what your specific situation is, there are a number of different ways you can tackle your bills repayments. There are different services that you can use to get rid of your bills, and there are also more than a few things that you can change in the way that you manage your finances, so that you can not only find your way out of financial obligations, but to make sure that you can never go back there again. Now we are going to give you some steps that you can follow.
Steps towards freedom of debt
Organize your repayments
Normally, people tend to make their bill repayments in different amounts each month. If you do not have a certain strategy for repaying your debts, it will take you a much longer time to do so.
And the opposite is, that if you have a clear debt repayment strategy, a plan that you can follow, you will be able to get rid of all those bills a lot faster. So the first thing you need to do is to start repaying your debts in a certain way. There are mainly two methods for debt repayment structuring that you can use:
From the smallest to the biggest bill amount
With this method, what you need to do is to focus on the bill that has the smallest amount. That way, you will be able to quickly get rid of that bill and with doing so, you will reduce the overall number of bills that you are carrying.
Once you get rid of the first one, repeat the same strategy with the bills that follow. Continue with that until there are no more bills left for you to repay. One of the key features that this repayment method offers is that it allows you to see an actual progress in your bills repayment. It is easy to lose faith when you feel like nothing is happening, but once you see that first, smallest bill disappear, you will definitely see that it is possible to get rid of your bills You will have the confidence to continue until you have regained your financial freedom.
From the highest to the lowest interest rate
With the second method, what you will have to do is to focus your attention and most of your funds on the debt with the highest interest rate. While you are doing all that you can to repay this debt, you would need to make only minimal payments to all of your other debts.
It might seem like a hard thing to do, but once you get rid of your debt with the highest interest rate, every debt that follows will be a bit less of a problem. The interest rate is where most of your money goes to.
So paying off the debt with the highest interest rate can really free up some space in your budget and will make the repayment of the rest of the debts a bit easier
Get a second, part-time job
It is only natural that you would want to rest after a whole day of work. However, when you are battling multiple debts, you need to put that rest time aside. Instead of watching TV or reading a magazine, try to find a second job.
Even if it is only for a few hours a day. You need to understand that when you are trying to pay off your debt, every single penny can have an impact on the end result. Nowadays, there are many ways that you can get some extra cash by doing some work from your home computer.
If you want to speed up your debt repayment process, getting a side gig would definitely help you do that.
Get rid of all the things that you do not need, and get as much money for them as you can
In your closet, there are probably many things that are just taking up space. Back in the days when people used to have garage sales, they would put on display all the things that they do not need and want to sell. Today, selling your things is much easier as there are many websites where you can sell whatever you want. This is a simple way of getting some extra cash that can be used for your debts repayment.
Adjust your lifestyle according to your current financial situation
If you are serious about getting out of debt, and doing it as fast as you possibly can, you would need to change the way you live. One of the reasons why so many people cannot win the battle with debt is the fact that they keep on living the same way that got them into debt in the first place. Unless you want to keep carrying your debts for the rest of your life, you would need to adjust your lifestyle to minimize your expenses.
By limiting your expenses to a minimum, you would be able to afford your monthly payments, and would be able to ultimately pay off your debt.