Three ways to deal with debt
Debt does have its uses, such as helping you to buy a property. But if you use debt to fund your lifestyle, it's time to address the situation.
Carrying a lot of debt means you're working to service this debt, plus it stops you working towards financial goals.
So how can you get out of debt?
Read on to find out…
Prioritise your debt
The first step is going through all the debt
you have. You need to pull out all your current statements. Look at what you owe and the current interest rates you’re paying.
Paying off the minimum monthly payment isn’t going to make much difference to what you owe. Instead you need to increase your monthly payments to pay off your debt faster.
The more you pay, the less interest you pay.
From the debt you have, pick out the ones with the highest balances and the highest interest rates. These are the ones to start paying off first.
Funnel all you can into paying these debts off each month. There is no quick fix to paying off debt, but in time you’ll be able to see the impact of paying off more.
Managing debt going forward
It’s important that you learn to live within your means. This means your salary should cover your monthly outgoings and putting money into savings or investments.
You need to see where you’re spending your money and look at ways of cutting these costs. Also look at ways to boost your income.
It’s also vital you don’t add to your debt, so stop using credit cards, store cards or short-term loans.
Plan your financial future
Whilst you deal with paying off your debt, start making financial goals for the future. This will help keep you motivated in paying off your debts, plus you can see how to put your money to best use once you’re not servicing debt.
Having a lot of debt isn’t a nice situation to be in. But if you’re determined and motivated, you can change this and look forward to a more stable financial future.
So there you have it. Three ways to deal with debt.
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