How To Lower Your Debts: Easy Tips & Tricks
Mel from brokeGIRLrich (October 19, 2021)
Dealing with debt can be overwhelming, especially when it begins to pile up. But you can start chipping away at it today with these easy to follow steps.
1. Spend smarter and save wherever possible
The first way to minimize your debt is by lowering your expenses. The less you spend, the more you can apply to your debts. One way to do this is by creating a budget, you can use a simple spreadsheet or a budgeting app. Don’t forget to include all your expenses and debts, and divide them into various categories. Once you’ve done that, see which of these expenses you can cut down.
2. Use proven debt reduction strategies
There are two main ways people tend to reduce their debt: the debt snowball method and the debt avalanche method. Both involve making the basic payments on each debt first. The avalanche approach suggests you pay off debts with the highest interest rate first, while the snowball method recommends you start from the smallest debt and work upwards.
3. Negotiate with your creditors
You’d be surprised how many people don’t consider negotiating with their creditors. Getting in touch and trying to set up a payment plan, or asking for lower interest rates, can help. Let them know you’re serious about clearing your debt, and they’re likely to be more supportive.
4. Claim back money if possible
Check if you’re eligible for any refunds. For instance, you might have overpaid taxes and qualify for a tax rebate. Also, look into government schemes for people affected financially by COVID-19. It’s never late to claim if you were eligible. Also, think about any potential compensation you may be entitled to, such as if you were in a car accident that wasn’t your fault, or experienced medical malpractice.
5. Be careful with your spending
Trying to get rid of your debts? Then you’ll need to be mindful of your spending. This means looking at every purchase, seeing if you need and can afford it, and comparing prices to avoid paying more than necessary.
There are numerous ways to improve your finances, and these five tips are a good starting point. They’ll guide you towards handling your debts and ultimately, financial freedom. If you need more help, consider contacting a financial advisor. These experts can help you set savings targets and recommend the best techniques for reducing your debts.