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5 Ways to Get Out of Personal Debt

By Vincent Hughes posted 22 Apr, 2020 08:30

  

Carrying debt puts you in a vulnerable financial position. Your first step if you’re serious about dealing with your debt is to face your financial situation head-on. 

You need to know exactly where you stand if you want to regain control of your finances. Getting out of debt means learning how to budget, having a debt repayment plan, changing your spending habits and reducing credit card debt. 

  1. Create a budget

If you don’t already have a budget, your first step towards getting out of debt is to create one. You need to take into account how much you earn and what you need to pay out every month. This means recording all your fixed expenses, such as your mortgage and car payment, as well as all your variable expenses, like electricity and food. 

When you subtract your expenses from your income, what you have left is your discretionary allowance, some of which you can use to help pay down debt. If you’re spending more than you earn, you either need to earn more or spend less. 

  1. Set up a debt repayment plan

Start by creating a list of your different types of debts and the monthly payments you need to make on each. If possible, you should try to pay off more than the minimum amount each month to reduce your debt as quickly as possible. 

You could also call your creditors and try to negotiate a settlement of your debts, hopefully for a lot less than you owe. 

  1. Deal with financial emergencies

It is impossible to predict certain financial emergencies and they can derail your financial plans. Lending Bear is a state-licensed company that offers online title loans as a way to deal with short-term cash needs. All you need is your vehicle and its title to find out how much you qualify for. 

Your credit score is not mandatory for you to access an online title loan. Repayment is typically due 30 days after the loan is made, you can continue to drive the car and your title is held securely until your loan is paid in full. 

  1. Consolidate your debt

One solution is to consolidate your debt and only make one payment each month. You could take out a personal loan and pay off all your existing debts with the loan proceeds. In this way, you roll multiple debts into one, ideally with a lower interest rate. 

Personal loans can work well for debt consolidation and repayment because they come with fixed interest rates, fixed monthly repayments and a fixed repayment period. You know exactly how much you need to pay each month and how long it will take you to pay off the loan. 

  1. Break your credit card habit

Breaking your credit card habit is hard but if you want to get out of debt, you can’t rely on your credit card to make ends meet. Living within your income may be quite an adjustment if you’re used to living on credit but it is well worth it in the long run. 

Part of living within your means is saying ‘no’ to some of your wants that you think are your needs. Items such as food, shelter, food, clothing and transportation are needs but luxury cars, jewelry and designer clothing are wants that can stand in the way of a debt-free life. 

When you’ve broken your credit card habit, you can trim your spending to the bare bones and create a surplus that goes directly into your credit card with the highest interest rate. 

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