How to Pay Off Debt
Nobody wants to be up their eyeballs in debt, but it can be an inevitable outcome of university education, a tough couple of months, or simply being in business. The bad news is that the longer you stay in debt, the more interest you may have to pay. The good news is that debt needn’t be permanent; if you are dedicated and savvy you can pay it off quickly and forget it ever existed!
Set a Realistic Goal
The first place to start is with a plan; after all failing to plan is planning to fail. Give yourself a date by which you plan to pay off all your debt and establish your strategy for doing so. Set yourself a strict deadline and be disciplined about sticking to what you have planned. Look at your existing finances and establish a fixed amount that, no matter what, you can transfer every month to pay off your debt. This will put you back in the driver’s seat, rather than having a black cloud hanging over you.
Make Bi-weekly not Monthly Payments
The easiest way to pay off your debts faster is to make bi-weekly payments rather than monthly payments. This could halve the time it takes to pay off debts. Of course you will have to come up with the money to pay off your debt, but this can easily be done if you find clever ways to save extra cash during the week so that you can make those bi-weekly payments. The next paragraph will tell you exactly how to do that.
In order to make more frequent and larger payments on your debt you need to trim your expenses. Over a two week period, observe what expenses you have that are unnecessary or profligate. For example, if you spend a lot in the food court buying lunch daily, make your own lunch and bring it to work instead of eating out to save money. A lot of people spend unnecessary money on coffee or tea at Tim Horton’s or Starbucks. Making coffee or tea at home and filling a thermos to take to work can again save you cash. Look at your phone plan or internet plan; do you really need unlimited bandwidth, texts or calling minutes? If you don’t, think about downgrading your plan. It needn’t be forever, and reducing your payments to your telecoms company over a 6 month period will help you save more money. Working out little tips and tricks to save money will help you to pay off debt quickly, you just need to think about where you can trim your expenses.
Put Away those Credit Cards
If you have racked up debt on credit cards it makes no sense to keep acquiring more debt. Remove them from your wallet so you won’t be tempted to use them. If you are really concerned that you won’t be able to resist, lock your credit cards away somewhere safe and give someone you trust the key, or put them in a sandwich bag inside a bowl of water in your freezer so that they are trapped in ice, ensuring that you can’t use them. Only start using your credit cards again once you have paid off all your debt.