Debt payment is something a lot of people knows all too well but it does not mean that they are doing it correctly. Ever since consumers have been allowed to take out funds from lenders with the promise to repay back, it has never stopped. And it might never will because the prevalence of debt in the society reaches far and wide.
Loans are ever present from individual borrowers to countries and governments. There are various loans that people use in their everyday lives. There are mortgage loans and car loans. There are even payday loans that are creeping up as well as title loans which some people believe is much more worse compared to payday debt. There are also ways to prioritize payments on consumer debt.
There are also companies dealing with debt payment with their creditors such as banks. They might have used the money to infuse much-needed capital money to expand the business. There are also some countries who borrow from the world bank or even other countries they conduct business with.
All these people and entities repaying debt might learn a thing or two from a family being able to pay off their debt in under three years amounting to $50,000 according to Huffingonpost.com. But not everyone could be as persevering as them and each financial situation differs from the next. There will never be two completely similar situations, especially with debt payment.
How to tackle your payments on debt
But the good news is that even if there are no two situations alike, there are processes and tips to help those who are repaying a debt in general. There are things you can look into to help you get started, continue on or even finish up repayment of debts and loans and other financial obligations.
- Analyze the situation. One of the things that you need to undertake when you are in the process of paying down debt accounts is to assess your current situation. If you married, it is best and advisable to do this exercise with your partner. You can discuss how you can proceed with debt payment in light of your current income and expense. It is important that as you deliberate on your financial obligations, you take on a positive mindset as well.
- List down your financial resolution. As you have identified how much your payments will be, you then need to put a plan in place. It can either be looking for ways to increase your income or cutting down expenses or even both, you need to decide on a plan of action. , You can even look into having passive income to complement your savings goals but the important thing is to be resolute in your plans.
- Consolidate your debt payments. This is a great way to manage all your debt payment woes because you can combine all of them under one account. You can look at one payment amount, one due date and more importantly, one interest rates for all your payments. This is a big help especially if you are juggling multiple payment accounts.
- Automate your effort in saving. Investopedia.com explains that this can mean any form of automatic transfer of money between accounts that a consumer maintains. It can be from one checking to a savings account or even as straight payment on their bills. This is a great tool that can help you meet your financial obligations specifically your debt payment.
- Stick to your plan. You need to make sure that you are following your gameplan to be able to pay down your debts. It can mean consistent monitoring on your balance with lenders or following the steps to debt consolidation. Whatever it is, know your plan by heart and stick to it.
- Track your progress. You also need to see how you are coming along with your goals. Apart from monitoring your progress, you need to make sure that you are making headway into paying down your debts. You can tie the progress to specific timeframes like months or even weeks. You can check if you are indeed able to pay down $100 a month on that debt payment.
Ideas to increase income
Everyone knows that paying down debt would be easier with two things, not taking on too much of it in the first place or having more than enough income to cover the payments. But if you are already dealing with the payments, that first one will remain to be a lesson for future reference. You now have to deal with looking for ways to increase your income. Here are ideas you can look into.
- Start from an increase in your current job. Naceweb.org shares that the average starting salary for the class of 2014 was at $48,707. But what if you did get this amount but you are still having a hard time meeting making debt payment? You can look into how your company gives out salary increase to its employees so you know the path to take. It can be years of experience or taking on additional skills that will prove beneficial for the company.
- Look for a side hustle. This can be your hobbies which you can turn into a cash-generating venture and help you increase your income in the budget. If you were a college athlete, you can go ahead look for kids to teach in your neighborhood about basketball, swimming or any other sport. If you love baking, then go ahead and sell your wonderful creations over the weekend to family and friends. This can even be a great deal when you are looking for work possibilities during retirement.
- Get a second job. Other people are also taking up a second job on top of their primary one to make ends meet, increase their income and make a debt payment. It is a tiring and one of the most physically demanding works they can take up because after they have put in about nine to ten hours of work in one job, they need to put in a few more for the second one which is oftentimes labor-intensive.
- Putting up a business. This is a great way to earn money but this is not something you take lightly. You need to prepare for this and consider all possibilities before going into business. You also need capital money to get started in putting up your business so it is a bit tricky if you are trying to increase your income.
Paying debt is something all too common but it does not mean that you can stay in that situation forever. It is better to be able to pay them off and go after your bigger financial dreams in life like owning your own house sans mortgage payments or being able to hang up your jersey and retire from work and travel all around exploring and learning new cultures.
But these have to start with a well thought of debt payment plan and a savings plan as well to help you get to where you want to be in your financial life. You can dream all you want but unless you take a proactive stance with the way you handle your finances, they will all remain a dream.