Five Tips to Help Pay off Debts
Sometimes debts can seem totally overwhelming and it can be hard to know how to pay them off. It is not something that will be easy either but it is possible with a lot of determination. Below are five tips which should help you to pay debts off.
- Start by finding out exactly how much you owe. Some people owe money in different ways such as loans, mortgages, credit cards and debit cards. Find out exactly how much you owe and who to first. Make a list of them all. This can be scary and many people do not like doing this. However, until you do this, you cannot properly start paying off the debt.
- Next find out how much each debt is costing you. Look at the fees and interest charges on each of the loans. It is wise to pay off the one that is most expensive first. However, some people would rather pay off small amounts of debt so that they can eliminate certain lenders from their list quickly and they feel better that way. If the most expensive debt is the largest it may just seem like it will take too long to pay off. Think about which will work better for you. The first saves you more money but the second may motivate you better. As you eliminate a debt, use the money you were using to pay interest/repayments on it towards the next debt that you choose to pay off. This way you will not feel any worse off but you will start to pay the debt off more quickly.
- If you have any spare money in savings accounts then use this towards paying debts off. People like to have money to fall back on and so keep some in savings even when they have debt. However, debt is very much more expensive than any interest you will get on savings and so in most cases it is better to pay back the debt with those savings.
- It is wise to also work hard to cut spending so that you can pay back the debts more quickly. Try to only spend money on necessary items and the cheapest ones at that. It can feel difficult doing this and like you are punishing yourself. You will be rewarded with a great feeling of freedom when you eventually pay off your debt though and so keep thinking of this fantastic reward that you will get.
- It can worth trying to earn more money as well. You may be able to get a pay rise, some overtime work or permanent extra hours. You could find a second job, work evening and weekends or even do some freelance work. You may be able to sell things that you own and do not use as well. All of these things could add up to a great increase in income and if you used all of it towards paying off the debt it could make a really significant difference.