10 Simple Ways to Get Out of Debt and Boost Your Finances
Many people’s finances are delicately balanced when it comes to income and outgoings, but that means they can easily fall into debt when something unexpected happens.
If you’re experiencing money woes at the moment or simply want to improve your financial position, begin your road to recovery by taking a look at our suggestions below on ways to get out of debt today.
1. Have a plan
Sometimes it is best to start at the very beginning and that means sitting down and fully assessing your financial situation and the debts you have to deal with. Getting everything organised is one of the key ways to get out of debt.
You should consider how much is left to pay on each debt and potentially focus on clearing the smallest ones first while meeting the minimum payments on larger debts. This is a process known commonly in the personal finance world as the debt snowball method.
2. Boost your payments
Paying more has to be mentioned in an article on how to get rid of debt. While it may not be an option for everyone, it should be considered if it is at all possible. The only potential sticking point here is that some loans and financial products may include charges for early repayment, so check your terms and conditions from the outset.
3. Work it out
Regardless of whether you are in part-time or full-time work, taking on more hours or considering a side-job could be useful as you look at how to get out of debt fast. It is a temporary step that could offer big benefits to your finances in the long run.
4. Reduce spending
This might be a fairly obvious statement, but it is undoubtedly something that has to be said when discussing the issue of getting out of debt. Take a look at your regular outgoings and check if you can cut costs and use any saved cash to pay off debts.
You could do this in a number of ways, from trying to save money on your weekly food bill to even changing to a different provider for gas, electricity, broadband or other services. Focusing purely on the essentials may be the best way to get out of debt.
5. Get budgeting
On a similar note, another way to manage your finances in a better way may be to set a clear budget in terms of what you have to spend. This will mean you know the outgoings you can afford, as well as what you would have to pay off on any existing debt.
This process might involve setting some limits on what you are able to spend a month on food, as well as how much you set aside for socializing or heading out with friends. If you’re new to the process it could take a little while to get used to, but doing this could offer a great number of benefits. As you examine just how to get out of debt, budgeting could well prove to be a useful tactic.
6. Avoid more debt
Reducing spending and budgeting can be so effective as you look at how to get out of debt because they go some way towards ensuring you avoid borrowing more money. After all, there is simply no way that you will get out of your current situation without ultimately changing your existing habits.
It is not always straightforward but avoiding more debt is undoubtedly an essential step if you are ultimately going to break free from it.
7. Consolidate it
Another strategy which has proven to be the best way to get out of debt for a number of people is debt consolidation. This process would involve you turning your debts into a single lump sum that can then be paid off on a personal loan, preferably with a low interest rate.
This could be particularly cost-effective if the debts you have at present include high interest rates, while consolidation means you combine all of the debts into one and can clearly understand the extent of your issue.
8. Try a credit card
An approach similar to the one above, you could take the same step with a credit card which features 0% interest on balance transfers. This could be hugely beneficial, although you should ensure you understand the terms and conditions on the card to guarantee it is suitable for your needs.
9. Seek help
Of course, if things are simply too much and you feel you are really struggling with your debt situation, you should consider seeking advice and support on the matter.
While there are a range of organizations out there who may be able to help, you should begin with simply speaking to the lenders involved.
There is no harm in asking whether there is an opportunity to be moved to a lower interest rate or if there are other options for changing your repayments. You may discover that some are more than willing to work with you to ensure the debt is tackled in the best way for all parties concerned.
10. Settle down
One option that you could suggest in conversations with banks or lenders may be the idea of settling a debt, potentially even for less than what actually remains outstanding. This is something that they may particularly be interested in considering if a debt has gone past a due date or a switch in interest rates has perhaps pushed it beyond your level of affordability.
Debt settlement is arguably one of the most effective ways to get out of debt fast, as it allows you to ultimately end a debt instantly and means you have no future obligations in terms of payments. You can approach this issue yourself, while there are also organizations that can assist with the process.
However, you should bear in mind that taking this step could also impact on your credit score.