Debt is like a parasite that slowly takes all your financial freedom away from you. It gets in the way of your dreams and keeps getting worse with time. If you’ve finally made up your mind to get your finances in order and get rid of all your debt, you’ve come to the right place. Here are some tips that will help you get rid of your debt within a year, have a look:
- Use Your Savings to Pay off Your Larger Debts First
You might think using your savings is not a good idea because it is there to help you get through tough times. However, you can take a proactive approach and make sure that you never have to see tough times in the first place.
Use your savings to pay down the debts with larger interests, so you can stop accruing more debt every month. Using your savings will help you get rid of your debt much quicker, which means you save a lot of money in high-interest fees and repayments every month.
- Use the Debt Snowball Method to Pay Off Your Debt
In the snowball method, you target the smallest debts first and pay them off one by one while making the minimum payments on the rest of your debts.
Once you’ve paid off a small debt, you move on to the next smallest and keep repeating the process until you’ve paid off all your debts. If you are committed and motivated, this process can help you eliminate all your debt within a year.
- Make a Budget
Having a fixed budget can give you a lot of clarity when it comes to your finances. It helps keep track of how much money is coming in each month and where that money is going. Plus, when you have a fixed budget, you refrain from impulse buying and have no trouble distinguishing between your wants and needs.
- Get an IVA
IVA stands for Individual Voluntary Arrangement. It is an agreement with your creditors where you agree to make regular payments to an insolvency practitioner, and they divide the money between all your creditors. Unlike bankruptcy, an IVA gives you a lot more control of your assets.
The IVA can only start if the creditor holding one-third of your debts agrees to it and will subsequently apply to all your creditors even if they disagree. Thus, if you are really struggling and fear bankruptcy, IVA is right for you.
- Take All the Help You Can Get
When you are struggling in life, you can always rely on your friends and family. If you’re having a really hard time and need some help to get back on track financially, you can borrow some money from your family or friends. One of the best things about borrowing from your loved ones is that you can take your time to pay them back because they won’t charge you interest or late fees.
At the end of the day, it all comes down to your commitment and motivation to better your financial situation and set yourself and your family up for a brighter future. Follow the above-mentioned strategies and you will surely be able to get rid of your debt within a year. Good luck, my friends.