In today’s day and age, most of the individuals go through the problem of being in debt. And, if you are a typical American, then you are no special. You can make your way into debt in a few weeks, whereas getting out of it is quite challenging. To get over the debt fast, most of the people need to go through years personal financial planning and hardcore budgeting.
To help you to make a way out of your debts, here we have discussed 5 smart ways to beat your debt.
In case, you have an average credit card balance of $15,609 and you pay the basic 15% Annual Percentage Rate (APR) and make a minimum payment of $625 per month then you will take 13.5 years to clear your debt. This is only possible if you don’t spend any extra from your credit card in the meantime.
The best way to get rid of your debt sooner is to pay more than your minimum monthly payment, whether you are carrying the personal loan, credit card debt or student loan. Paying more than your minimum amount will not only help you to save on interest but will also accelerate the process of payoff.
Most of the time we end up spending more than our income and don’t go for savings. However, contrary to this, to sort your finance and to leave a debt-free life, it is very important to plan your savings. By saving a small amount every month you can create a financial cushion for future and can set aside some funds to deal with the financial loss or any type of emergencies. There are many ways you can save your money. The early you start saving in your life, the more fund you will be able to accumulate in a long-term. Moreover, you will not need to be dependent on credit cards to fulfil your desires.
If you are ok to pay more than minimum monthly payments on your other debts and credit card, then you can consider using the debt snowball method, to enhance the process of payoff. Firstly, you will need to jot down all your debt from smallest to largest. Invest all your extra fund in the smallest balance and simultaneously make minimum payments on your large loan. Once you pay off your smallest balance start putting the extra money towards the next smallest debt and continue so on. Over time, your small balance will disappear one by one and you will be left with no debts to pay.
Clearing your debts with the method of the debt snowball is a great idea, but if you increase your income by earning more money than it will further amplify the process. You can do part-time jobs along with your permanent job in order to earn extra and to create strong personal finance. You check for various options of a temporary job without long-term commitments and can pay off debts right away using the income of temporary jobs.
If you have successfully made your way out of debt, then it’s time to make smart financial planning in order to fulfill your short-term and long-term financial goals. The best way to do so is to make a smart investment. Just think that instead of paying monthly interest you can avail interest every month. Moreover, along with the benefit of investment returns, you can also gain the benefit of capital appreciation in a long-term. Irrespective of your investment planning, it is important that your money should multiply instead of decreasing or remaining inactive.
It’s your choice whether you want to continue living in debt or not. But if you want to face the reality of the situation then it is very important for you to let go of debts. No matter what type of debt you are in, there is always a way out. You can simply follow these smart tips to beat your debt fast and can create a strong financial portfolio in the long-term.