We have all had our fair share of debts. Many of us take out loans to fund several projects, including college fees, a business startup, car and home financing, to name a few. Although most of us hope to repay the loan within the stipulated time, there are instances when debts can spiral out of control. Without a proper repayment plan, swimming in uncontrolled debt can affect not only your credit score but also your way of life and health. Here are a few tips and tricks on how to stay on top of your debts and possibly get out of debt.
1. Make A List Of All Your Debts
Make a list of everyone you owe, the exact amount, and the interest to be paid. This is the only way you can have a clear idea of how much debt you are in, and possibly the first step to getting your finances in line. Creating the list for the first time can seem intimidating, especially if dealing with large debts with relatively high interest and a short repayment period. Do not let this scare you off; it should be a motivator to craft ways to get these paid off or, even better, devise a viable repayment plan. Be sure to write down all the debtors and the amount owed before moving to the next step.
2. Prioritize Important And High-Interest Debts
This is especially important if several debts/loans are to be serviced. Start by categorizing and prioritizing them based on how fast they need to be paid. Utility bills, rent, mortgage, and council tax are examples of debts that should be prioritized. It is after securing your most basic needs that you can then move to the next category. With these sorted, you can then start working on expensive debts, especially high-interest loans. Identify all loans that attract high interest, e.g., unsecured loans, then put them next in line.
3. Create A Budget/ Spending Plan
Having a budget plan and sticking to it is one of the best ways to manage your finances and essentially get out of debt. While our spending habits might be unique, it is always advisable to prioritize the most basic needs first and account for every spending habit you have. With the goal of saving as much as you can to get out of debt, you might want to cancel all unnecessary expenditures. Consider switching to a more affordable phone contract, cancel cable and gym memberships, switch utility providers (to the cheapest ones), and cancel other unnecessary subscriptions. You can also free up some more money by making your home more energy efficient. Upgrading your heating and lighting to the most energy-efficient methods is one way to free up some money.
Once you have found what you have left over after all the cuts, you can then look into ways you can gradually grow the money you have left over. Many people do this by investing in the stock market. However, before you jump into the trading world, you’ll want to do plenty of research on market trends and how the stock market works. Once you have got to a point where you have a good understanding, you will need to find a trading platform that works for you. Then look into stocks that you’re interested in, and use a multitude of resources like stock forecast websites to help you make your decision. Stock forecast websites use previous and current market data to make predictions, for example, by looking into Mullen Automotive stock price prediction to see previous years’ growth and future market predictions. From this data, you can then make a decision as to whether you want to invest in the long term.
4. Seek Expert Financial Advice
Creating a budget plan and monitoring your spending habits might not be enough to carve your way out of debt. A financial expert is the person to see for solid financial advice and better ways to get out of debt and manage your finances.
In addition to seeking expert advice on debt management, considering investment opportunities with a well-researched background can also play a pivotal role in your financial strategy.
For those interested in the automotive sector, getting informed about potential investments, can provide insights into future financial planning and opportunities for growth. You don’t necessarily have to pay for expert financial advice; several companies offer such free of charge.
Most debt charities, e.g.Citizens Advice Bureau, National Debtline, and Step Change Debt Charity, can help. If you are in Scotland find out What is a DAS in Scotland? and see if this is a viable option for you.
For complicated debts, you might want to renegotiate repayment terms with the creditor. Most creditors will gladly craft a viable and accessible repayment plan for you. You only need to visit them in person and explain your situation. Most debt officers will understand your situation and do whatever they can to help you.
5. Go For Debt Consolidation
Debt consolidation entails transferring all debts to a single account or creditor. One of the advantages of this is that you won’t have to worry about managing several loan accounts at a go. It also buys you some months to figure out your finances and even have the loans restructured to suit your income status. Although this option may seem counterintuitive to some, it is one of the most recommended ways and methods to get on top of loan repayments. Some creditors will even allow for the loan amount to be transferred at 0% interest for a few months. Financial experts recommend using the 0% interest repayment period to offset the loan as much as possible. This could be the break you needed to get your finances in order and/or get out of debt.
