At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.
Dealing with debt can feel overwhelming, but with a strategic approach you can work your way out of it.
Create a comprehensive budget and list of your debts
Begin by making a detailed list of all of your debts, including who you owe the money to, the outstanding balances, And the interest rates, as well as the minimum payments, then create a budget that tracks all of your income and your expenses. This will help you see where your money is going and identify areas where you can cut back.
The goal is to have a clear understanding of your financial situation so you can make informed decisions about how to allocate your money. your money.
Utilise the debt snowball method
Pay off your debts from the smallest to the largest regardless of the interest rate. Make minimum payments on all of your debts except the smallest one and put as much money as you can towards the smallest one. Once the smallest debt is paid off, move on to the next smallest.
and so on. This method can provide psychological wins that motivate you to keep going.
Consider consolidating your debts
We prefer the Debt Snowball method, however, debt consolidation is an option and involves taking out a new loan to pay off multiple debts. You are really just ‘shuffling’ money around.
This can simplify your payments and potentially lower your interest rate, making it easier to manage your debt.
Options include personal loans, balance transfer credit cards with a zero introductory rate, or home equity loans. However, it is important to carefully consider the terms and make sure that the consolidation will actually reduce your debt burden. Actually paying it off is what’s needed.
Increase your income
Look for ways to increase your income, such as asking for a raise (make sure you are worth it!!), taking on a part time job, or freelancing in your field of expertise. The additional income can be directed towards your debt.
Accelerating your payoff plan, be creative and open to opportunities that will match your skills and schedule.
Cut expenses and apply savings to your debt
Review your budget for areas to cut back on, such as dining out, subscriptions you don’t use, or unnecessary shopping. Every dollar you save can be applied to your debt. Consider adopting a frugal lifestyle temporarily to maximize your debt repayment efforts.
It will be worth it, and it won’t be for nothing.
That’s a wrap
Finally, it’s essential to avoid taking on new debt while you’re paying off your existing debts.
Focus on living within your means and building an emergency fund to cover unexpected expenses without resorting to more credit. Seek advice from financial advisors or counsellors, or participate in a debt management program.
You can also provide valuable guidance and support throughout the process.
If you need any financial help or advice please get in touch with us at Super-Advice.
