Thinking of “how to pay off debt” can be overwhelming and get anyone frustrated, especially when you realize how little your savings or income can do to get you out of the situation.
No one wants to be financially indebted to someone or an organization that can quickly seize your house, car, or any other valuable property to pay up your debt.
One of the reasons people often get themselves into such shitty situations isn’t because they intended to.
Probably they were desperate and needed the fund as soon as possible, and that seemed to be the only option they had.
They’d take the fund, not minding the high interest which would later grow and turn out to be a bigger problem than they had imagined.
Yours might be different. Perhaps you invested the fund in a promising business. Unfortunately, things didn’t turn out as expected. Fire in the hole!
Whichever way you got yourself into this mess doesn’t matter. What matters is you paying off all debts as soon as possible.
All you need is a little advice on what can be done to help you get out of debt faster and efficiently.
How to Pay Off Debt – The two methods .
Snowball Method and Avalanche Method
However, our focus will be on the snowball method. This has seemed to be the easiest way for lots of people to get out of debt.
How to Pay Off Debt Faster and Easily
Estimate Your Debt, Savings, and Income
This is the first step to settling your debt. You can’t just assume you got liability to pay and just keep running around finding a way to pay up.
Sit down, get a pen, bring together all those receipts, get your account statement and all other necessary papers.
Now, start doing a thorough estimation of your income, savings, and debt. Call your creditors and ask how much you owe.
Estimate how much you’ve got left and how much is coming in for you every month.
When you’re done auditing, carefully take a look at the result. This will help you realize how much you’ve been lagging.
Lock the Doors Against Additional Debt
You’re in debt already. You can’t afford to add more debts to the list. So this is what you should do: Pick up your wallet, pour down your credit cards, and flush them down the toilet.
Fine, maybe that’s way too much. Still, you have to find a way to stop using those cards because they are good at what they do (getting you into more debts).
A very good option is to give them to your enemy and tell him or her not to give them back to you until a speculated time, no matter what.
Or you can keep them with a trusted family. However, a family can be sweet most times, and give back the cards as soon as you come asking for them.
Just stay away from the cards. It’s a way to discipline yourself and help you stay away from more debts, till you’re able to settle the pending ones.
Create a Deadline for Yourself
Giving yourself a deadline is an excellent way to set the track for yourself. This will depend on how much you owe and how soon you have to pay off your debt.
Setting a deadline for yourself will also help motivate and hasten your speed in paying off your debt.
Increase Your Income to Pay Off Debt
The reason you’re in debt in the first place is that you lack funds. Now you should source for the fund. Aside from your regular job, you can sign up for another part-time job.
This will add up as an extra source of income for you. You can also ask trusted family members for help. Don’t feel ashamed to approach the good ones.
They can even have other better ideas and options to help pull you out of the debt.
Another way to get a few more bucks to settle your debt is to sell less useful properties. It could be anything, as long as you don’t need it or you’ve got another.
Also, you can rent out space in your apartment (If you own it). Your income will add up with this, and you’ll be able to pay off your debts faster.
Stingy Budget Strategy
A ‘stingy budget strategy’ as I do love to call it, is a method of financial management. This method involves extremely cutting down expenses to the lowest sum possible.
It’s similar to saying you should subside the “I would love to…” desire.
If you do take five to seven bottles of a particular drink weekly, cut it down to one every week.
Do you order pizza every day? Now you’ll only order once a week.
How much do you spend at the cinema? No more cinema for now. Stick to YouTube. It’s free.
As you cut down all these expenses, make yourself believe you’re still spending as usual, but save up the money for all those pizzas, movies, and drinks.
Sum it up at the end of the week, and you’d be surprised how much fortune you’ve been losing.
It is a very effective way of increasing your income, saving more, and getting out of debt faster and efficiently.
Implement the Snowball method
Now that you’ve increased your income and you’ve gotten more savings. It’s time to start paying off the debts. Go back to your maths (as in step 1). Start paying off your debts from the least.
This will help you build momentum by achieving small wins upfront. If you pay off debt and there’s more cash to spare, use it to up the next smallest debt on the list.
It’s like stepping up a ladder. One step before another. With this, you’d have paid off most debt before you even realize it.
However, it’s a free world! If your brain tells you otherwise, like paying off your debt from the biggest. Anything works, you decide to make. Do what works best for you. It’s also a way of challenging yourself.
Keep Track of Payments
With every debt paid, it should be marked in your record. Keep track of every payment to know how much is left to go. And how long you have left (as in step 3).
As you keep marking debts in your record as paid, you’ll see how much you’ve been helping yourself so far by implementing all the previous steps to quicken the pace of settling your debts.
Look Left, Look Right, Look Left Again
The last but most crucial part, stay out of debt. You’ve experienced how uneasy it can be to pay off debts.
The last thing you want to do is get into another debt again. Try as much as possible to stay away from unnecessary and burdensome debts.
Find out and calculate the interest rate of any fund before taking it. Don’t be desperate.
Calculate how much you’ll have to pay back with interest and see if it’s reasonable. Do the maths with your present income.
Then ask yourself, “will I be able to pay back without difficulty?”