Debts accumulate when you take a high-value loan, like for a car or a house, and pay only the minimum on the loan every month.
This way, the debt keeps dragging on for months and years.
It is becoming increasingly difficult getting debts wiped out, as the average household debt in Australia has grown by 7.3%, estimated in 2022.
But if you exercise financial prudence, you can wipe them off without making your life miserable.
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| 7 Ways to Get Your Debts Wiped for Good!: eAskme |
Various ways aid in debt repayment, like adjusting your budget or using financial windfalls. But it all depends on your income and your financial situation.
Here are a few ways you can wipe off your debt for good.
1. Plan to pay more than the minimum
If you pay more than the minimum on your debt, you will save money on the interest. It reduces the principal amount on your cards.
Moreover, keeping up with more-than-the-minimum payments for a long time will significantly reduce the accumulated debt.
You just have to be careful that your monthly expenses or emergency savings don’t go for a toss.
2. Prepare a budget to stick to
When planning to pay more than your minimum, your monthly budget will have to go down because your monthly income remains constant.
Write down your expenses, revise where you spend and where you can cut down. Eliminate wasteful spending and expenditure occurred on unnecessary items.
Once you budget your spending, stick to it.
3. Consider a credit card balance transfer
You can opt for a credit card balance transfer to a lower interest rate if you have a credit card.
This method is somewhat risky, so if you go ahead with it, consider every detail beforehand.
Transfer balance to a new credit card with a lower interest rate, usually during a promotional period.
Choose this option if the difference in interest rate is high, and you can repay it during the offer period.
4. Look for additional income sources
With the increasing price of goods and services, moonlighting is a prime choice for every professional.
It means that you don’t need to stick to the belief that your income should come from one source only.
Instead, you can start a small business alongside, freelance on your free days, get a part-time job on weekends, or invest in stocks or mutual funds with extra money.
It will get you additional income to pay off the debt.
5. Put windfall money into a debt
A financial windfall is when you get a large sum of money unexpectedly.
For example, you win a lottery, get it in a bet, or maybe a tax refund.
Usually, people save up this money and splurge on it.
Instead, use it towards your debt. It will increase your minimum payment and reduce the interest on it.
6. Don’t take on new debts or investments
If you have a lot of debt and it becomes difficult wiping it off, don’t consider taking another loan for refinancing or investing.
Often, people think it is better to get a personal loan at a lower rate of interest to refinance a big loan.
It is a viable option, but not when your debt is big.
Don’t invest in mutual funds or stocks either because it will get negated in debt and make you feel demotivated.
7. Discount your debt
Discounting your debt can also be an option. Many collectors and loan sharks buy debt cheaply and give it out at high interest for profit.
Negotiate with the original collector. Big groups accept written communication like applications and letters.
You can even consult professionals for this, like Credit Mediation debt negotiation services to negotiate with collectors and settle with a lesser amount, getting a good discount on the debt.
Moreover, you can also get options to settle the payment in different installments or pay and full and final settlement as per your loan amount and the collector.
Conclusion:
Wiping off your debt is a difficult job.
It is usually a lot of money, and paying it off alongside maintaining your monthly expenditure and saving is psychologically more daunting than financially.
But it’s not impossible, so consider these ways to make miracles happen without disrupting your monthly finances.
Still have any question, do share via comments.
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