It’s not all the time that we live our lives conveniently and worry-free. As they say, life is not a bed of roses for the majority of the populace – and that’s true. Earnings are not enough, and most of the time, we fall into the problem of accumulating debts, so we survive our day to day lives.
Debts can be accumulated due to many things. It could be brought about by mismanagement of your funds, but it could also be due to emergencies or unforeseen crisis, just like the global pandemic that hit us hard. It causes closure of businesses thereby creating huge unemployment and poverty, putting almost every nation in debt. Not everyone is prepared for this kind of situation. Majority of the workforce is earning just enough for their daily needs, and they are the ones who really suffered because of the pandemic and they keep on suffering because of the many uncertainties brought about by the virus.
But whatever situation is, debts should be settled. Otherwise, it will cause a bigger and deeper problem. Persistent calls from collectors are kind of irritating and disturbing. Most important of all, your credibility and your face is at stake here aside from the fact that your credit score would suffer.
Here’s some practical tips on how to pay off your debt
- Acknowledge your debt. List down all your debts from highest to lowest.
- Plan the repayment process. It is highly suggested that you prioritize debts incurring the biggest interest, least priority to those with minimal interest or none at all. Make a worksheet and allocate monthly payment for each on the list. It is important that the balance decreases monthly.
- Pay double when able. If you have extra for the month or you get to hold unexpected money, double up your monthly repayment amount starting from the debt on top of your list.
- Control your spending. If you have debts, it’s a sign that you really need to review your spending habits. Adjust appropriately. Cut down on unnecessary expenses. Your goal here: not to add up anymore to your existing debts.
- Find a way to increase your income. Consider side hustles. Dedicate all income from here to debt repayment.
- Look for alternatives. Find other loan providers offering lower interest rates. Make sure you use this to pay off your debts incurring big interests. If employed, take advantage of the loans offered by the government. Interest from these government loans is much lower than the usual rates offered by private financial institutions. You may also consider debt consolidation. Know more about it here.
- Call a friend. If possible, get help from “real” close friends. Getting funds without interest is a big help to ease up your burden. Again, make sure to use this to pay off debts incurring big interests. And an important reminder, do not forget to pay back your friend once you are already capable to.
- Shorten your loan repayment term if capable. Shorter loan period means smaller interest to pay.
Taking small steps to solve a problem is better than taking no action at all. When you are finally debt-free, you’ll feel a sense of accomplishment and you will be hundred folds wiser and happier after winning over this struggle.