Step 1: List Your Debts
You can’t begin a war without first determining who your opponent is. As a result, we’ll start by analyzing your problem. Also, find the target. Nothing should go unnoticed. It would be absurd. Note all your debts and the total amount that needs to be repaid on a sheet.
Don’t forget about any of them!
- Consumer credits
- The car loans
- Home loans
- bank overdrafts
- You took out loans with your relatives
Scan your accounts and find their traces. Do you have your list? Good. We can move forward.
Step 2: Sort Your Credits
It’s time to clean up now that you’ve made your list. This stage is critical for the rest of the process. It is not to be overlooked. The goal is to get your borrowings to develop a killer approach.
‘How?’ or ‘What?’
Forget about interest rates, loan periods, and lenders. Sort your credits by the amount of capital left. Uniquely. Sort them in order of smallest to largest. It would result in the following. Have you experienced a similar outcome? Good.
This list should be kept warm. It will be necessary for the remainder of this article. Now it’s time to get your finances to repay these loans.
Step 3: Manage Your Accounts
What follows is crucial. Take care. You must boost your monthly payments if you want to pay off your debts quickly. There was no other option. There’s still a long way to go. You have two options for dealing with this: Boost your earnings and reduce your costs. There are a million and one options for boosting your resources. However, receiving your first bit of income may take a few weeks or even months. Now is the time to better your financial status and slash your monthly bills.
As a result, it’s critical to clean up your bank accounts. Once you have completed this file, you will be able to identify excessive charges that you can reduce.
Step 4: Reduce Expenses
It’s fantastic: you can see your monthly spending. Most of your expenses are self-evident. All you must do now is cut them down. On paper, at least. It’s a lot more complicated.
It will be necessary to make sacrifices. It’s the cost of doing business.
You’ll need to focus on the most expensive and easily accessible expenses. Consider the following scenario:
Hobbies(s)/transportation/races
However, take care to complete this work correctly. To save money, you must change your habits.
You can do the following:
- Remove a restaurant from the month’s list
- Eat at home as much as possible
- For the shortest distances, walk
- Take the bus more frequently
- Shop in stores that are suited to your budget
Have you gotten the gist of it? Did you get the idea? Do not drastically lower your fees if you manage to free up between $50 and $100. That’s good for you?
The following tip will also allow you to increase your resources to repay your consumer loans.
Step 5: Take Advantage of Good Opportunities
Let’s look at the giant picture. You must expand your resources to repay your debts. As a result, make sure to put all your revenue to good use. Allow me to explain.
Even though it may appear unusual, you may notice a unique cash stream.
It could be:
- A thirteenth month
- Your employer will give you a profit-sharing bonus
- You have a relative who wants to provide you with money (please introduce him to me)
- A product you sold
There are plenty of other things. Make a money reserve in a savings account and add to it. This money will assist you in planning for the payback of your debts.
This sum is best kept in a Sustainable Development and Solidarity Booklet (LDDS).
It has a ceiling of $12,000, so you won’t get stranded. And having your funds available is still a major plus. Holding off on releasing your funds and partially repaying your debt for several months would be foolish.
But be cautious. Don’t get caught in the trap!
Step 6: Settle the First Debt
Perfect. You’ve cut down on your spending. You have money in the bank. You can begin repaying your debts. Do you recall the list you made in step 2? Please return it.
Consider the tiniest debt. Also, see if you can pay in advance. There’s no need to remove the whole debt.
You can minimize your monthly payments by making a partial payment.
As a result, you’ll be able to save more money each month. You’ll also speed up the creation of your cash reserve for paying off your remaining capital—a circle of super-virtue.
Step 7: Create the Snowball
Slowly read. This method will assist you in meeting your deadlines. If required, repeat the process twice.
You now have new resources because of splitting some of your loans. What am I going to do with this cash? It’s straightforward. You’ll use it to speed up the payment of any outstanding credits. You’ll start a snowball effect that will propel your results forward.
Consider the case of Bill, who paid off a $150 monthly loan. He now must pay back his second loan. A $9,000 automobile loan monthly payment of $187 is available.
Step 8: Ask for a Lower Rate
Requesting a reduced interest rate is an excellent strategy to get out of debt. This method helped me pay off my debt more quickly and save money on interest.
The more you pay in interest, the more you pay in principle. It will save you money and likely reduce your time paying off your debt.
Calling your creditor and requesting a rate reduction is the best strategy to cut your rate. It won’t be harmful to ask; even if they only missed it by a few percentage points, it will significantly help.
The creditor is more inclined to deal with you if you have a strong track record with them. Plus, they understand they may have to make additional sacrifices using a credit counseling service.
They’d prefer to pay less interest if they’d get reimbursed in full. Remember to ask for a cheaper cost if you have medical bills, as they may be ready to work with you.
Step 9: Streamline Your Expenses
Debt relief necessitates a thorough examination of your spending habits. It ensures that more money goes into debt rather than stifling your progress.
Examine all your expenditures and ask yourself the following questions:
- Is this purchase providing me with good value?
- How long has it been since I used this service?
- Is it possible for me to save money on this service?
Depending on your responses, you may be able to free up additional funds to apply to your debt. Canceling or negotiating reduced pricing for services you no longer use are two terrific approaches to generating extra money to pay down your debts.
Step 10: Know Yourself
Although less tangible, this strategy is the quickest way to pay off credit card debt. You must know yourself, your spending triggers, and your daily routine.
It’s critical to avoid anything that tempts you to spend money. Everyone’s situation is unique. When I was depressed or needed a pick-me-up, I was tempted to go to the mall and buy something.
I wouldn’t spend money I didn’t have if I didn’t go to the mall. Your persuasion will be unique.
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