One of the biggest drain to your happiness and financial success is debt. And given that you have existing debt, your funds are tied in a losing game. For which you will get penalized for any additional month that you fail to make a payment.
What can you do to get out of such a situation?
Despite the amount of debt you currently have, here is a look at some steps you may use to repay your debts. Avoid taking on additional debt, and attain the evasive goal of being debt-free; for good. So let’s get right to it.
Create a Budget
When you have not created a budget, then this is the time to make one. Why do you need a monthly budget?
A budget will help you guarantee that you some funds available for covering your payment plan. And by following it, you will check your spending that way you don’t end up getting a personal loan and adding to your current debt.
For a detail-oriented borrower, you may consider tracking your spending. This will help you know how much you spend on different categories. Alternately, when you’re seeking for a simple way to plan, you can just take savings off right away – then have yourself cope using whatever remains.
Prepare a Repayment Plan
To reduce your debt, you can use the stacking method. How does it work? Here you will repay the most you can towards the highest interest balance until that debt fully repaid. Then you shift to the following highest rate balance. You will tackle any kind of moneylender personal loan first because it’s the most costly debt you have. Keep making minimum repayments on the remaining accounts.
Another plan is the snowball method, that allows you to repay the most you can towards the loan with the lowest balance, despite the interest charged. This will offer you the motivation by crossing one loan off the list, hence keep you on track.
Decrease Your Expenses
If you have been living beyond your means, then it’s best you make adjustments to a lifestyle that you can afford. It could be you have to stop dining out a lot, or you might need to move to a much smaller home.
When you already are living a modest life, you could consider reducing temporarily (or cut out) a whole spending category. It can be as easy as stopping cable TV, eliminating candy and soda, or cancelling magazine subscriptions.
What more can you do to achieve this? Again it could mean taking serious measures, like using public transport, having a roommate, downgrade or be rid of your mobile phone (downgrade from smartphone to one without a data plan).
Grow Your Savings
Even though you are looking at being aggressive about repaying down your existing debt. Be sure that you are also putting aside sufficient funds each month towards growing some savings.
Many times, Singaporeans fall in debt since they have encountered with a big, unforeseen expense that they weren’t ready to handle. Establishing a reserve amount of savings to cover you and help you avoid trouble later.
So how can you go about starting a savings reserve? When you’re facing high-interest debt, begin by growing an emergency fund totalling $1,000. Such an amount will cover you in those times you face unforeseen bills. Once you have attained the goal, focus on repaying down your debt.
Avoid Increasing Your Debt
It will be hard to pay off your debt if you are still taking piling more while you are attempting to clear your debt. In such a predicament, what can you do so that you can attain debt freedom? First, start by putting all your credit cards away, destroy them, freeze them in ice etc. Just look for ways necessary to make sure that you do not add on more debt to the already existing personal loan balances.
When dealing with debt, personal loan facilities can be positive or bad news. But, if used responsibly, loans are rewarding and even convenient. But, avoid relying too much upon beyond the safe point. This way you avoid drowning in debt.
Seek credit counselling or Work with a financial advisor
In Singapore, pride and shame play a major roll in how Singaporeans manage their money. But having debt is nothing to cause you shame. Most of the advice offered is rather simple. Even then, it is certainly not easy since it means making behavioural changes. Often time it means that you start looking at the matter from a different perspective. How can you manage to shift your perspective?
At times you will need someone to guide you. And then someone might be a financial counsellor or a reliable advisor who can help you prepare a budget and look for some ways to repay your debt quicker
Keep Your Goals in Sight
Continue holding a positive momentum going forward. Also keep your motivation up, through the frequent reminder of what you are attempting to achieve. Keep in mind that by setting yourself free from debt can offer you the chance to follow new goals. It will also help you be rid of the strain of being strapped financially.
In what way can you remain motivated all through the repayment period?
You can look for a way to reward yourself for every milestone you attain. This will act as a way to keep you motivated and you will be able to notice the debt reducing greatly as you make efforts to repay.
Budgeting and saving money doesn’t have to be a New Year’s resolution you make every year yet follow it for only fourteen days. Making small improvements to your mentality regarding debt and spending patterns have great long-term benefits to your financial prosperity.
Learn from your past mistakes and do everything possible at present to correct them. All this while keeping your focus on your goals. Reducing your debt is among the best move you can ever do. Also, create a strategy to help you pay down your debt fast.