Erasing debt is perhaps the most important aspect for financial security in today’s insecure economic landscape. Everyone seems to have a solution; however, there are always people in debt! Here are five ways to shortcut your debt down to size.
Use the Snowball Effect
The snowball effect is a psychological edge that you can give yourself when trying to get out of debt. Pay off your smallest debt first. After that is done, snowball any remaining payments into your next lowest debt, and so on. The advantage is that you will soon have less bills to take care of, which helps you build momentum.
Buying Your Necessities in Bulk
Buying things that you can get in large quantities at a warehouse like Costco is usually an advantage—they last longer and cost less per unit. You will have more money to put towards debt if you can stock up on things like rice, bread and underwear. The upfront cost of the warehouse membership is usually paid back within the first purchase.
Consolidating your Debt
Debt consolidation is a service that is not used as often as it should be. If you are overwhelmed by the number of creditors that you have, you can find a third-party creditor that will consolidate all of your bills into a single payment. Bankruptcy is also an option for consolidating your debt. However, you must be sure that you do credit counseling beforehand from a company such as Abakhan and Associates Inc. in Victoria in order to ensure that bankruptcy or consolidation is the best option for your particular situation.
Having a Rainy Day Fund
Part of the reason that many people are not able to get out of debt is that another bill will come along and push them right back in. With every debt payment, you should add to a cash reserve in your rainy day fund. This will keep you from having to go back into debt should an unexpected expense should arise during your payback period.
Getting Another Job
If you have any free time available in your day, you may have to supplement your income with another form of employment. Happily, the second jobs are usually based on passions and hobbies that are being monetized. This means that you do not have to do anything that you would not normally do: you’re just figuring out a way to get paid for it.
Getting out of debt is a difficult proposition; however, it is not impossible. Following the steps above will ensure that you have a clear path to financial freedom.