Get rid of debts
A person may be exposed in his life to a financial crisis that makes him borrow in one way or another, such as borrowing money from a bank or any person to pay off his debts, and this is what makes him enter into some labyrinths that impede arranging and organizing his income in order to pay off the accumulated debts and get rid of them as soon as possible and without affecting in any way Big on the rest of the expenses and obligations, and in this article we will mention several ways and tips to pay off these debts and get rid of them.
Ways to get rid of debt The following are points that summarize the most prominent tips and methods used to pay off personal debts:
[insertAds]Method number 1 to Get Rid of Debt
Determining the creditors and the required amount of debt: This is done by making a list of the debt that summarizes (the name of the creditor, the amount of the full debt, the monthly installment for payment, the last date of payment).
Paying the monthly bills on time: because the delay in paying the monthly dues will make it very difficult to pay later, taking into account the benefits arising from that.
Create a special calendar to notify the dates of bill payments: through this calendar, information related to each bill (payment date and value) can be included.
Paying the lowest value dues (at least): In the event of failure to pay all the monthly payments, although this step will not meet the full payment, but it reduces the growing size of the debt.
Determining which payments should be paid in the beginning: Usually, the best thing to pay is credit card debts, because the fines for delaying the payment of debts reach large limits compared to other debts.
Follow the policy of having an emergency fund: because this will provide payments for repayment in the event of default at some time.
Make a monthly budget for expenses: because the purpose of this step is to secure the amount due to cover the purchase of monthly basic needs, and the longer the planning is somewhat long-term, the more possible the person will take the appropriate reaction towards any future setback in the debt payment process.
[insertAds]Method number 2 to Get Rid of Debt
budget organization
The first and most important step in getting rid of debt is managing and coordinating financial expenditures with income, and this can be done by sitting alone, or with a financial advisor, and defining a list of monthly expenses, gross monthly income, and outstanding debts, and it must be noted here that Be realistic about monthly spending; Reducing spending or increasing monthly income leads to damage to the public financial budget; Therefore, certain amounts must be allocated for each category of expenses, which are housing, food, transportation, entertainment, debt payment, etc. It is also advised to prepare a comprehensive budget and a long-term plan to get rid of debts, and adhere to it.
Determine the value of the debt
The creditor must know the truth of the total value of his debts; Because he will not be able to develop a plan to reduce debt without knowing its true size, and it requires honesty with oneself, lying to oneself will never help, and a person must know everything related to debts, loans, and credit cards.
trying to increase income
Loans and debts can be eliminated by increasing income if possible, and income can be increased by doing any additional work if possible, and volunteering in additional work; Where these things help to get rid of debt, but they require sacrifice, and make more effort, and it is worth noting that more money can also be earned by learning and developing a hobby; Such as learning to draw and using it to sell artwork, selling collectibles in the garden if possible, or talking to friends and family in order to support what the person intends to do.
Prepare a debt repayment plan
Debt can be disposed of by choosing one of the following plans: Pay off low-value debts first, making sure to pay off the lowest value of other debts at the same time if possible, and then move to the next smaller debt after completing its payment, and this method is characterized by allowing the individual to feel Satisfied that he is making progress on payment.
Pay off the debt with the highest interest value first, then move on to the next debt, and this method is the most beneficial from a financial point of view. Pay off the oldest debts first; Paying it off gives the individual a great sense of comfort.
[insertAds]Method number 3 to Get Rid of Debt
Determine where the money goes
This is a very important step to start paying off debts, as this method determines where the expenses go, where the money goes, what is important in these expenses and what is not important, so you can bring a paper and a pen and count the expenses for at least a whole month and write down everything that is spent starting from the price of a cup Coffee, even the magazine, and finally the biggest expenses, and then you determine what fixed and important expenses are and what are non-important expenses that can be dispensed with.
Elimination of excess expenses
After the expenditures are counted and determined, they are compared to the monthly income of the individual. If these expenditures are less than the income, he uses the extra money to pay off the debts, but if these expenditures are higher than the income, he dispenses with the increase in expenditures to equal the income.
Reduce fixed expenses
As fixed expenses are the ones that consume the bulk of the income to cover them, if the income is not enough to pay the debts, these expenses must be reduced. For example, household bills such as: the electricity bill and the phone bill can be reduced by reducing electricity consumption as needed, as well as reducing phone calls only for the necessary Including, the mortgage can also be refinanced to reduce the interest, or if the individual has a good history of payment, the debtor can be asked to reduce the interest even slightly.
Find a way to improve income
You should look for a way to raise income or find a door to additional income, and you should pay attention if there is a high tax refund every year, this means that there is a large deduction from the monthly salary, and here the issue must be discussed with the employer in order to reduce the rate of deduction and benefit from it in the payment of debts.
Debt writing
The accumulated debts and the interest rate on them must be recorded and documented, in order from highest to lowest, in order to know who is the first and most important to repay them.
Transfer high interest accounts
High-interest credit accounts can be transferred to other accounts with lower interest, paying attention to all the existing conditions for the new account, as there are some offers for transferring accounts that are low in interest and for a specific period, but return and rise significantly after the specified period expires, and the presence of all debts on the same The card lowers the credit score.
Pay off high interest debt first
After determining the debts and arranging them in terms of interests and determining the percentage of increase in income that can be used to pay off debts, you must start paying off debts with high interest first, then the least, and so on.
Pay off the smallest debt first
This method is called rolling the snowball, meaning that starting with small debts is an incentive for the debtor to proceed with paying the rest of his larger debts. Determining the debts that must be addressed and starting to pay them depends on the financial stability of the individual and his budget.
Pay more than the minimum
Banks or lenders usually set minimum repayment installments, but it is always recommended to choose a payment category greater than the minimum, which speeds up the repayment of the debt or loan and reduces the accumulation of interest. Payment systems have this option, so the borrower or debtor must check the terms of his loan.
Stop using a credit card
Continued use of credit cards can add more debt to your account, so it is recommended to stop using credit cards when paying or submit a request to freeze them from the bank, which is a simple strategy that removes the temptation to overspend, increases control over money and expenses, and reduces additional pressure on Monthly income.
Remove all credit card information from online stores
The temptations of online shopping should be reduced, and one of the effective ways for this is to remove all credit card information from online stores, and it is preferable to stop subscribing to the promotional messages sent by these stores to their customers, which is an effective and proven method that reduces the accumulation of debts and draining the monthly budget.
Change habits
If the spending is in excess of the monthly income with a continuous accumulation of debts, then there is a behavioral problem that must be solved, where the necessary expenses of food, shelter and health must be determined, and then reduce and reduce any other expenses that can be dispensed with and are usually expenses and expenses on some luxuries.
Finding an additional source of income
The debtor or borrower may need to search for an increase in his income, in order to speed up the repayment process and stop the accumulation of debts and interests, by looking for additional work or starting an independent project, and using this income to pay off debts.
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