How to get out of debt 101: Everything you need to know
There’s absolutely nothing about being in debt: your spending power is compromised, you have to deprive yourself, you sometimes feel like you’re only working to repay money and not to enjoy life, and if you’re luck is really bad…you’re getting phone calls. All you can think about is how to get out of debt.
Time for us to get you started on liberating yourself by showing you how to get out of debt with strategies that are really not that hard to implement at all.
So then, where do we start?
With a plan – we need a sound plan for you to commit to. This plan will consist of the following:
- The total sum of all your debts
- The income you have available after paying essentials (like rent and groceries)
- Crafting a budget
If you want to know how to get out of debt the right way, our first order of business is to pay off your smallest debt first while maintaining your minimum monthly payments on your larger debts.
The reason for this is, once you pay off that first small debt, you no longer have to make any interest payments, which immediately starts saving you cash. You then also have the monthly payment you were already accustomed to paying for that small debt free to put down on your other debts.
You then just follow through on the next biggest debt and pay down the minimum payment plus the money you have free from that first small debt.
So while you’re working on how to get out of debt using that methodology, you’ll also have to add a spending tracker app to your phone. You’ll use this tracking app each time you purchase anything at all and over time, the app will clearly show you where you’re putting your money in the wrong places.
With this information at your disposal, you’ll be able to clear up even more cash to apply to your debt. We challenged one of the LoanAway staff to try this and he managed to free up an extra $400 a month from spending on things he really didn’t need.
How To Get Out Of Debt: The Alternative
Not everyone’s situation is the same. You might be in a situation where money is tight, even when you’re being wise with your spending. If that’s the case, even taking the rolling repayment strategy can be a little tough to pull off.
If that’s the case, don’t fret – you do still have options for getting yourself out of debt.
It’s called a debt consolidation loan. How it works is, you use the loan to repay all of your debts in one shot and only have to make one payment each month at one single interest rate.
The benefits of a debt consolidation loan is that you no longer have to write yourself several reminders to pay off all your outstanding bills on time. On that note debt consolidation ensures that you’ll never accidentally miss a payment and have your credit score dinged as a result.
If you’d like more information about taking a debt consolidation loan, feel free to contact us online or get in touch with one of our agents by phone: (866) 689-0091.