And boy will you love what comes when you finally pay off that debt. You’ll have less stress, more cash flow, better control of your money, you’ll feel more in control of how you’re managing your money day today, and you’ll also free up your borrowing capacity.It will set you up to really achieve some of your big, life goals. Here we share five tips to help you get rid of unwanted debt.
Tip Number 1 – Make a list of all your debts
List all your debt in order of the highest interest rates to the lowest interest rates. Choose the debt that has the highest interest rate and pay that one off as soon as possible. This means that with all your other debts, you are going to pay the minimum repayments and transfer all your extra money onto the one that you’re focusing on.
Tip Number 2 – Pay all your bad debts
If you can, speak to your mortgage broker, look at your credit cards and your personal loans, and see if you’re able to consolidate them into one facility at a much cheaper interest rate. This is going to help you get on top of that debt faster, and make sure that you can get rid of it as soon as possible. In terms of looking at this, also call your creditors, and ask them if they are willing to accept a reduced pay-out, if you can pay them out quickly. Often, they’re willing to do this, and this can also help you get rid of your unwanted debt quicker.
Tip Number 3 – Implement the 50/50 rule
The 50/50 rule is where 50% of your income is going towards your living expenses, the other 50% of your income is going towards all your debt repayments, and making sure that you’re transferring most of that income to pay the debt that you’re trying to eliminate. Also, look for ways to increase your regular contributions to your debt. For example, you might have some lump sum bonuses through work that you can put into there, or tax refunds. Try and get it down as quickly as you can.
Tip Number 4 – Identify the cause
This is about reducing unnecessary spending. It’s important that if you’re going through this process of reducing and getting rid of unwanted debt, that you’re changing the habits that got you to this position in the first place. Once you actually start to see your debts reducing, and you start to see your money habits changing, you’ll be so excited and you’ll want to keep doing it, and keep improving your money habits, and it will definitely be worth it in the end.
Tip Number 5 – Celebrate your success
It can be a long journey when you start paying down your debt and getting rid of some of that unwanted debt. So, make sure you reward yourself and know how you’re going to reward yourself. It’s a big deal and you should be proud of yourself. As you start to eliminate those unwanted debts one by one, start reallocating that money that you’ve been putting to that first unwanted debt on your list, to the second unwanted debt until eventually, they’re all gone.
Paying off unwanted debt can take time but it is worth it in the end and puts you on the path to achieving your financial dreams and goals. If you haven’t reviewed your existing loan for a while, chances are you could be paying high loyalty tax and could do well with refinancing your existing loans or consolidating your existing debts. Are you looking for expert help to get rid of your debt or get ahead financially? Get in touch today!