Last Updated on October 10, 2018 by Melissa S.
Are you starting to get buried in debt? As hopeless as it may seem to dig your way out, there’s almost always an escape, however it could involve making some strict life changes and taking immediate action. If you’re struggling with debt, here’s how you can dig your way out.
Stop borrowing money
You can’t ever expect to get out of debt if you keep building new debts for yourself. Make a vow to stop borrowing – cancel your credit card if you have one and say no to loans.
The only two times you should borrow when in debt are to consolidate or refinance. The likes of bill consolidation loans can help to turn multiple debts into one debt, which could make them easier to manage each month. Refinancing meanwhile can help you to get better interest rates – if the interest keeps going up on one of your debts and you seem to be making no dent in it, you may be able to take out a new loan with better interest rates that you can pay off more easily. Never pay off a debt with a higher interest loan, otherwise you’re just adding to your debts.
Get help from friends and family
It could be worth asking friends and family if they can pay off any of your debts – this will mean that you are then in debt to your friends and family, however they are unlikely to charge interest and are more likely to offer a more flexible way of paying back the amount due. Just make sure that you don’t take advantage of friends and family by not paying them back as this could damage your relationships with these people.
Talk to your creditors
Many lenders and bill providers are open to negotiation when it comes to paying back debts. If you ask nicely and put across a good enough cause, these creditors may be able to offer you a better repayment plan such as lowering your interest or allowing you to freeze the loan repayments for a few months with no additional charges. The worst thing you can do is ignore your creditors – if you keep ignoring demands to pay them back you’ll anger them and they’ll be less likely to make these compromises.
Throw every bit of money you can at your debts
When trying to pay off your debts, you need to be prepared to prioritise them above other spending. If you get a work bonus or get some money for your birthday or inherit some funds, throw these at your debts to help pay off as much as you can. As for your debt repayments, try to pay more than the minimum repayment amount each time – you’ll lower the interest on the debts and will ensure that the debts are paid off faster.
Know when to consider professional help
If you owe thousands in debts and you feel there’s no way you could pay them off in your lifetime, you may want to consider talking to a debt advisor – in some cases it’s possible to write off some of this debt or come to special agreements with creditors. Bankruptcy isn’t the only option – there could be other drastic ways to get rid of your debts that aren’t as destructive.