4 Ways to Effectively Get Rid of Your Debt
Looking to get out of debt fast? Well, the first and best way to do so is to increase your income and reduce your expenses as much as you can.
While this is easier said than done, particularly in South Africa where it is difficult to find another means of income, there are also other methods you can implement to help you get out of debt effectively and fast.
Debt consolidation is often recommended to those who are overindebted and may cost a pretty penny too. This is because you must hire a debt counsellor that is trained to solve any debt-related problems you may have.
This is where the problem comes in for most people.
Everybody wants guidance on how to repay their debts, along with support from a registered professional, but given that they cannot afford it or prefer to solve their debt-related issues themselves, they can do so effectively by doing the following.
How to Get Rid of Debt Yourself
- Draw up a budget as a part of your financial plan, but with the goal to repay your debt
Create a 50/30/20 budget and focus on your most important expenses, which are housing. Since housing is considered the highest expense in most households, you should allocate approximately 50% of your income to your home, and then 30% to everything you want or need to buy and allocate 20% on saving or to repay your debt. If you’d like to separate your savings and the amount you pay back on your debt, you should divide it further.
- Get one or a few different side hustles
How do you do this? Well, everybody is skilled in something, so think about what you’re good at and make use of it. Whether it’s an online job, making something with your hands and getting creative or getting a second job at night/ on the weekends, you’ll surely come up with something.
- Regulate your spending and be strict on your expenditure
Avoid spending too much money by only spending according to your budget and not using your savings money, unless you’ve reached a goal and repaid your debt, or can afford it.
- Make extra payments where and when you can
Not only will this make you feel good about your overindebted status and financial situation, but it will also help you repay your debt faster and place you in a positive light on both your credit report and with your credit providers. Plus, it won’t hurt your credit score either.