It’s very easy to get in debt, but it’s really hard to get out of it; it may take few days to secure a debt but it will certainly take years to pay it off. Numerous people are suffering from bad debt problems due to lack of proper financial planning. Different people follows different strategies to get out of their overwhelming debts, below mentioned are top 5 ways to overcome bad debt problems:
- Avoid taking new debts: This will not get you out of the debt but this will at least have a control over your existing debts. When you’re paying off the debts and simultaneously adding new debts it doesn’t help you in clearing the dues. Actual problem starts when you spend more than yours income; avoid credits cards, control your desires and also avoid purchasing expensive products which will help you to control the situation.
- Pay off debts on time: After controlling the new arrears then it is time to pay off the existing amount dues. Make monthly or yearly planning for paying off the dues. Pay off the dues on regular intervals of time so that you can escape the penalties and save money. Also pay more than the minimum amount; this will help you to clear the dues much earlier than prescribed time limit.
- Find ways to earn extra Money: One of the fastest ways to overcome bad debt is to earn extra income; this will eventually help to pay off the dues. If you want to clear the dues by doing some part-time job then are plenty of options available to choose from and you can work on them in your free time. Some of these jobs include sell your stuff online, babysitting, rent out a room, freelancing, consultancy services etc.
- Negotiate for reduce the interest rates: The amount that you pay as interest rates seems to be negligible but if that is calculated as a whole it would turn out to be a huge amount. Therefore, it is better to discuss the matter the creditors and ask them to lower the interest rates. This may not be the successful all the times but you can try for it. Often, customers with good payment history will get this type of chance.
- Build your Emergency funds: Create an emergency fund from your monthly savings this will help you to meet any unexpected circumstances. You can also avoid taking advances in such emergency situations since interest rates will be high. If you don’t have such an emergency funds and require instant cash then you can opt for short-term loans like payday loans.
When you are overburdened with different debts you can go for consolidating your debts. Here you take a new loan to repay all your existing debts. The main advantage of consolidating your debts is that you need to pay a single monthly payment with reduced overall interest rate.
About the Author:
My name is Katie. I am a tech writer from UK. I am into Finance :). Catch me @financeport
5 Ways To Get Out Of Bad Debts