- Increase Your Debt Repayment Amount
Increasing your debt repayment percentage by at least ten or even 15% can go a long way toward repaying your debts. This is considering that credit card companies and other creditors recommend paying at least 2% of your outstanding balance per month; bumping the percentage will significantly improve. One of the advantages of paying a higher-than-minimum repayment amount is that you get to clear the debt quickly, hence keeping the interest collected to the minimum. This will also make it possible to clear off most of your debts and save some in the process.
- Use Part of Your Savings to Pay Large Debts Off
Most of us put aside an amount each month to cater for a ‘rainy ‘day. While this is good, it doesn’t really make sense to have thousands of dollars in your savings account but with creditors breathing down your neck. The worst part isn’t with debtors calling you daily, but the risk of your credit score suffering in the process. If possible, consider shifting a small amount to go toward repaying larger loans. Using a fraction of your savings to offset a larger debt makes more financial sense than leaving the amount ‘collecting dust’ in the bank. Just ensure you don’t use all your savings to repay the debts.
- Renegotiate Your Loan Interest Rates
If you have been servicing the loan for some months/years but feel the interest is too high, consider renegotiating the same with your lender. Most creditors are willing to listen and might even down-adjust your interest rates. An IVA is often an option to help to pay down debts, however you will need to fully understand the implications and what happens after an IVA.
- Negotiate for a lower interest rate
Call your creditors to negotiate a lower interest rate. You’ll be surprised how many creditors will be willing to reduce your interest rate based on your payment history and account standing. Most creditors won’t need convincing especially if you have been faithful with repayments. While it might seem negligible, paying 1 or even 2 percent lower than the standard interest rate could see you save more money in the long run or even repay the loan faster.
- Use Tax Refunds to Repay Debts
Nothing is more refreshing (financially) than receiving tax refunds or tax relief. While most people would use the money to pay for a vacation or get expensive equipment, consider using it to pay off part of your debt, significantly larger ones. Using these refunds to pay off debts is more rewarding than a few days off on vacation on a remote island or desert safari.
- Sell Items You Don’t Need for Cash
Do you have some ‘valuables’ stored away in self-storage or in the attic? Selling items without sentimental value to you can see you earn some money to pay off some debts. All you need is to give them a good clean, take photos of the same, then put up a listing on either craigslist or eBay. A garage sale can also be a wonderful idea too. Most of us have a habit of holding on to items we no longer need; selling some of these can earn you a decent amount to offset some of your loans.
- Cash in Your Life Insurance
Don’t have another method of boosting loan repayments? Why not cash in your life insurance? This option is recommended for individuals drowning in debt and even on the verge of a breakdown. By cashing in your life insurance, you will have a decent amount to pay larger, high-interest loans faster, earning you valuable time and some peace of mind. Anyone that doesn’t have dependents or children under their care will find this option most fruitful/beneficial.
This option is, however, only feasible for individuals with whole-life insurance policies. If you have been paying for life insurance for several years, it might have accumulated a significant cash value you could use to escape a sticky situation. The best part about this is that you can use part of the policy to pay off debts and keep the remainder for your loved ones.
- Look For an Extra Income Stream
Getting a second job or starting a business to generate extra income is one of the best options to repay debts. Most people drowning in debt do not have money to cater to their most basic needs. Getting a second job or running a side hustle can help you manage your financial deficits. With a solid business plan, your business could generate enough money to repay the loans and keep you afloat even during the most challenging times.
