How to get out of debt – 10 great ways to pay off your debts faster
Debts. Who wants them! But living with debt doesn’t mean that you need to stay in debt forever. Follow these simple steps on how to get out of debt and you’ll save money, pay off your debts faster and ditch a pile of stress along the way.
1. Add up what you owe
The fastest way to get on the debt merry-go-round is to have your debts spread across multiple credit cards, personal loans and overdue bills. So the first step is to add it all up so you know exactly what the total picture looks like. It may be a little scary but you won’t be able to get on top of it until you really understand what you’re dealing with.
2. Set a budget
Set yourself a financial budget, and make it realistic (if it’s not, it won’t last very long). Setting a budget that you can stick to is one of the easiest tools to help you get back in control as you’ll see how much money you have left over each month that can be used to get out of debt.
If you have a lot of different debts but not a lot of spare cash to pay them, you’ll need to prioritise which gets paid first. The golden rule here though is to always at least pay the minimum amount owing or you’ll add to your woes by paying extra interest and default fees.
4. Pay new bills when they fall due
Don’t make a bad situation worse by not paying new bills when they come in. Most utilities and many Council bills have incentives to pay early so it’s a good idea to try to make the early payment date if you can as you can save yourself quite a bit of money. If you have old unpaid defaults, pay them off as they may be affecting your credit score (read more – How to improve your credit score )
5. Use your calendar
The easiest way to add to your debt situation is to get hit with late payment fees and extra interest because you forgot a bill was due. When a new bill arrives, add it to your online calendar so you’ll get a notice when it’s due, and you’ll never miss a payment again.
6. Automate your payments
Setting up an automatic monthly payment direct from your bank account is a great way to ensure you stick to your plan and get that debt paid off. You can even arrange for extra payments to go straight to your credit card or another loan as soon as you get paid (if you don’t have it you won’t miss it – so this is a great strategy if you’re tempted to spend just because there is money sitting in your account).
7. Talk to your creditors
If you find yourself simply unable to meet your debt commitments, it’s important to talk to your creditors so they know what’s going on. They will all have financial hardship policies so if you talk to them early on you’ll be able to avoid those regular phone calls asking for payment – and you’ll be able to set up a repayment plan that you both can live with.
8. Find ways to make more or save more
If you can’t come up with ways to make more or save more money you’re just not trying hard enough. Here’s a few ideas that will help to make your bank balance look a little rosier (but remember to use that extra cash to pay your bills and reduce your debt):
- Sell the stuff you don’t use or need anymore through online sites like eBay, Gumtree or Facebook’s marketplace.
- Rent out that spare room, or advertise it through Airbnb.
- If you live close to the city or a busy commercial area, rent space in your garage to a commuter.
- Do a few hours driving on the weekend for Uber.
- Reduce your grocery bills – head to the discount stores like Aldi and buy in bulk when things are on special.
- Cook in bulk and freeze the leftovers – that way when you’re tempted to hit the takeout food you can hit the microwave instead.
- Walk or cycle to work to save on petrol or transport fees.
- Turn the temperature down on your hot water system (if it’s set above 60C you’re donating money to your energy company that would be better in your pocket than in theirs).
- Check your insurance excess – you can often save money by increasing the excess, and that means a lower monthly premium for you to pay.
- Ditch that expensive newspaper or magazine subscription – all the news is online and it’s free!
9. Consolidate your debts
Sometimes the easiest method to manage your debts is to consolidate it all into one larger debt. That way you’re not trying to manage payments across multiple bills at different times of the month, which can get a little confusing and can be easy to miss. (Read more about the pros, cons, and alternatives to debt consolidation)
10. Debt Agreements
When all the basics aren’t enough to help your situation and debt is overwhelming your life, consider financial help and debt management solutions. A Debt Agreement is a legally binding agreement arranged by a Debt Management company between you and your creditors where your debts are combined into one affordable regular repayment with an agreed timeframe. Advantages are that debt agreement is often negotiated with a possible reduced total amount of debt and all interest on the debt is frozen, saving your debt from spiraling further out of control. You will then have an affordable plan and a structure in place to get out of debt.
Everyone could do with a little support from time to time and if you can’t see any light at the end of your debt tunnel, we’re here to lend a hand. Safe Debt Management administers debt agreements with professional, private and personal service. We take care of all of the paperwork and we also talk to any overdue creditors you may have to let them know we’re setting up a payment plan. Find out how we can help you control your debt and make your life better.
Get in touch today – you’ve got nothing to lose but your debt!