Top Tips for Reducing Debt
If you have a lot of debt you may have come to the point where you would like to reduce it. There are lots of possible steps that you can take but it can feel extremely daunting to know what to do and where to start. It is good to have a methodical approach so that you can focus on it and work through it step by step. Here of some suggestions of what to do:
Add up Debt
This is the hardest stage but it is important. Find out exactly how much debt you are in. Find out what you owe and who to. This is not a nice thing to do but it will enable you to move forward and start with repaying the debt. Do not let it alarm you either, even by just looking at the figures you are closer to repaying it.
Decide Which to Repay First
It is a good idea to think about which you are going to repay first. You will save the most money if you repay the one that is costing you the most first. This is probably the one with the highest interest rate. However, you might prefer to tackle a small debt and then you will be able to clear it more quickly and have that good feeling that one is gone. You may also have a reason for wanting the clear a specific debt early, perhaps because you owe money to a friend or family member or because you particularly dislike and get stressed by a certain debt. It is worth considering which order you want to repay them in.
Pay Minimum on Everything
Make sure that you are repaying everything you need to on all of your debts. There may be minimum amounts you have to pay or a regular repayment, make sure that you are prioritising paying these and that you have direct debits set up so that they get paid first. You do not want to concentrate on repaying one loan and forget the others, so it is really important that you make sure that you get those paid as well. Just pay the minimum though so that you can use any spare money you have towards repaying the loan that you have chosen first.
Whittle Away Selected Debt
Once you have done the above stages, you need to start to pay off the loan that you have picked. Firstly, you need to make sure that there is no fee for repaying it early. Some cash loans online have this and it means that you will have to pay extra and this could just be a small amount that is worth paying, but it could be a larger amount which could make it not worth repaying the loan early. You will need to think about whether you are going to still benefit by repaying it early if there is this cost. Once you have established this you need to start to whittle away at some of the debt. This will mean making higher repayments than normal. You may want to set this up so you just make a larger repayment each month than you normally do or might rather pay in lump sums when you have them or perhaps both. You will also need to decide how you will find this extra money. You might have some savings you can use, be able to sell some things you own and no longer need, find some extra work, perhaps online, freelance, temping or a second job or you might be able to reduce your spending in other areas by buying cheaper items or less of them.