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Debt can be something that looms over your head for a very long time, depending on the scale of debt you are in. Some interest rates can be very high making it even harder to pay off your debts. Additionally, some lenders will charge you an early repayment fee and others will allow you to pay them early, it all depends on who you have as the lender.
If you are someone who is struggling with debt and finding it difficult to pay off your debts then consider these simple methods to pay off your debts.
Set up a direct debit each month
One of the things that you can do to ensure you start paying off your debts each month is to set up a direct debit. One of the reasons why people take longer to pay off their debts is due to having to manually set up the transaction themselves.
We recommend that when you create this direct debt, it is the day after your wage enters your bank account. That way you are ensuring you have enough in your account to pay off your debts. If you don’t have enough money in your bank account then there is a chance your bank can charge you for overdraft fees.
Make additional payments whenever you can
If you have spare money at the end of the month then it will be good to use this money to pay off your debts. The more money you pay off sooner, the less money you will be charged in interest. Another method would be to increase your monthly payments with your direct debits however, you would have to commit to that. Only make these additional payments when you have the money to help reduce the financial stress that you have.
Reduce your expenses
A good sign of maturity would be to reduce your expenses so you can pay off your debts sooner. It is something that many people don’t do and they try to live the same lavish lifestyle to pay off their debts. It just won’t work like that.
If your debt is only small, consider having a few quieter months not doing anything. Things like an overdraft can be paid off very quickly if you want to. All you need to do is reduce the amount of time you are spending with your friends and family. It can also include cancelling your gym membership if needed.
Increase your income
This is easier said than done but another good way to pay your debts off is to increase your income. In some jobs, you can have the option of working overtime to get that extra pay. For other people, they don’t have that option so they will need to consider a side hustle. Websites such as Fiverr are websites that allow you to do freelance work for businesses.
Use your savings
If you have been building your savings up for months/ years, you need to consider using this to pay your debts off. Making your payments sooner will reduce the amount of interest you pay overall. This would be best for those debts that are high-interest accounts.
If money is tight every month, we advise that you don’t use all of your savings to reduce your debt, simply because you will need an emergency fund from time to time.
Debt consolidation
If your debts are becoming overwhelming and you have multiple, it is advised that you consider paying off your debt through debt consolidation. This is when you take out one large loan to pay off all of your debts. This will then mean you only have to pay off one lender.
Debt advice companies will offer this to people who are struggling to pay off their loans. However, it is important that you carefully consider this and the benefits are worthwhile with the debt consolidation. This is because a debt consolidation can offer you lower interest rates however, because the debt is much larger, it will take longer to pay off the debt.
Summary
As you can see, there are many methods to ensure that you can pay off your debts. The sooner you pay them off, the better so it is important that you do this as it means you will be paying less interest. You can also consider a debt management plan to pay off your debts if that would make it more manageable for you.