So maybe I sound a little ambitious here. I mean, not everyone has the same amount of debt. Some people can owe as much as $100,000 or as little as $1,000. Whatever it is, I hope to help you solve that problem in as little time possible so that you can go ahead and fix your financial life and get a fresh start.
These steps are not magic bullet solutions but when applied together, can help you fix this added stress in your life called bad credit. Bad credit debt consolidation can help but how do pay it off in a year? Here’s how:
- Stop buying useless things
This can be a little challenging especially for the shopaholics and hoarders but if you seriously want to get out of debt right now, you need to stop buying things that do not have value. If anything, they only add clutter to your home. Clutter means stress and you don’t need that in your financially challenged life right now.
Live within your means. Buy only the necessary and leave out the extras. A little sacrifice now will yield a better tomorrow, one that’s worry-free.
- Don’t get into any more debt
Avoid all temptations to access more money like credit cards and payments. Cut up your credit cards or freeze them. Say goodbye to your loan companies. If you’re not going to make a stand on your finances, marketers will do everything they can to lure you in so you can owe more money. It won’t be easy but learn to say this one word every time someone attempts to offer you easy finance: NO.
- Pay high interest debts first
Financial institutions make money off you based on the time that you pay them. It only makes sense to pay the debt with the highest interest rate. The sooner it is taken care of, the better. Sort your debts by interest rate and pay off first the one with the highest interest rate. Pay it fast and take on the next highest one and so on.
- Do a balance transfer
Transferring to a different financial institution isn’t necessarily bad. In fact, it can be good for you if you get a lower interest rate. This doesn’t give you a pass to spend more on your new credit card though. You’re only doing a balance transfer. So try to look for the lowest interest rate with the longest duration. Read the terms and conditions making sure it’s not a too-good-to-be-true deal. Once you’ve found one, rearrange your list of debts again.
- Prioritize your expenses
Get a piece of paper and write down your monthly income after deducting all taxes. Now write down your expenses every month and organize them by priority. It might look something like this:
- Rent
- Food
- Transportation
- Clothes
- Monthly weekend getaway
In the example I just showed above, it’s pretty obvious that the first three are necessary. Transportation can be removed if your workplace or school is near where you live.
Completely remove from your expenses items that are not a priority in your life right now. The goal is to have expenses that are significantly lower than your income. You don’t need anything else other than a roof over your head, food on your table, and clothes on your back. The less you spend, the more money you have for paying off your debt agreement.
Provided you are committed to being debt-free and you follow these steps religiously, you might just pay off your debt in a lesser amount of time than you’ve expected. We hope these tips help.
Did you have other hacks for paying off a debt agreement in less than a year? Let me know in the comments.
This article is contributed by Katrina Fernandez
