Today, thousands of people owe money to various lending institutions. That number is growing at a very fast rate. The sad part is that over half of them are unable to repay their debts; hence, they turn to debt management agencies for assistance.
If you cannot afford the fees charged by the debt management agencies, you can search for free advice on debt on the internet. The internet has everything you need to get started. Listed below are a few tips on how to get out of debt.
Don’t get into more debt
The first thing that you should do is stop getting into more debt. Use cash to pay for all your purchases and limit the use of credit cards to emergencies only – a new iPad Mini or iPhone 5 is not an emergency. You should also come up with a monthly budget and stick to it.
Spend less than you earn
The main cause of debt among young people is spending more than they earn. Such people use credit cards as a source of extra income rather than a convenient way to shop without liquid cash. As a result, they end up in more debt than they can handle and the high interest charges that come along with it.
Therefore, if you want to reduce your total debt or get out of debt, you should make sure that your total expenditures are less than your total net income. That way, you will have control of your finances and you will be able to service your debts without any problem.
Reduce the interest rates on your debts
Some people have credit cards with high interest rates. For instance, having a credit card with interest rates as high as 30% doesn’t make sense. It is even worse if you are struggling with debt. People with credit cards with such interest rates end up paying the interest instead of the principal amount. Therefore, you should contact your creditor and renegotiate the rate. If you are not in a position to renegotiate with your creditors, you can hire professional debt negotiators and let them negotiate on your behalf.
Increase your income
Do everything you can to increase your monthly net income. You can take a part time job as a tutor, music teacher, babysitting, blogging, or working overtime. The extra income should be used to pay off the debt. The harder you work, the faster you will clear your debts and live a debt free life.
Although you want to clear your debts as soon as possible, you should be realistic about it. There is no way that you can clear debts that you accumulated in three years within one week. You should balance paying your debts with living a comfortable life. It goes without saying that you will have to make sacrifices in order to clear your debts. However, you should not go overboard with the sacrifices.
Prioritize your debts
Make a list of all your debts and decide which ones should be cleared first and which ones are not urgent. It would be advisable to clear the debts with the highest interest rates fast and remain with those that have a relatively low interest rate.
Seek professional assistance
There are very many debt management agencies across the country. Do your homework and select the best agency. The debt management company will help you come up with a plan to reduce your debt significantly or get rid of your debt completely.
Basically, there are three main options of getting out of debt, debt consolidation, debt negotiation or debt settlement and bankruptcy. Your specific situation dictates the option that best suits you. There are very many sources of free advice on debt but these are main tips.