5 Strategies You Can Implement to Get Out of Debt | Mike McRitchie

5 Strategies You Can Implement to Get Out of Debt | Mike McRitchie

Photo by Artem Beliaikin from Pexels

has debt.

The right kind of debt is an indicator of your financial
literacy and investment acumen. A car loan that enables you to get to work hassle-free
and a mortgage to purchase your first home are both examples of good
debt. The bad kind, however, keeps you from moving forward. What’s worse
about bad debt is that it can lead to you sinking deeper and not being able to
get out.

To successfully manage debt and eventually get out of it,
you need to come up with a good plan and stick with it. Check out the following
strategies you can implement so that someday, debt will become a thing of the

1. Calculate how much you owe.

There’s nothing like the cold, hard truth to know
exactly where you stand, debt-wise. Make a list of your IOUs, including the
creditor’s name, date of the loan, balance, interest rate, minimum monthly
payment and the last payment made.

Gather all of your current bill statements (loans, credit
cards, student loans). Include medical bills, family loans and monthly
expenses. Check your credit reports to ensure everything is correct/accurate.
Find out if your credit score makes you eligible for debt consolidation or
lower interest rates.

Know your monthly take-home pay and set a goal. This means
making a calculated decision to pay off all your debts within three years or

2. Find out if you can
reduce your interest rates.

Monthly loan and credit card payments that are just
enough to cover the interest rates can be frustrating as doing so hardly makes
a dent on the principal. To address this problem, you may want to look at
lowering your interest rates in the following ways:

  • Find out if you qualify for a credit card with a
    lower interest rate.
  • Try to negotiate a lower rate in a current card
    you’re paying off.
  • Apply for a balance transfer credit card with a
    zero intro rate or lower interest rate.
  • Look for a loan with a lower interest rate.
  • Consolidate all of your student loans.

Of course, in order to do these things, you need to do
a bit of research, make calculations and use your negotiating skills to get the
help you need.

3. Pay more than the
“minimum amount due.”

By this time, you may already know that paying for
exactly what’s due for the month (minimum) won’t make a dent on your total
credit card debt or loan. So aim to pay more than what’s stated. If it says
$150, aim for $250-300. But make sure there’s no prepayment penalty if you’re
paying off a mortgage, and that any extra payments you make are going towards
the principal, not the interest.

4. Earn more money while
spending less.

It’s easy enough to understand how one can earn more
money. It doesn’t have to be a raise or finding a better-paying job. You can
tap into getting a side gig or a weekend job to augment your income. This can
be anything from walking dogs, babysitting or performing odd jobs on certain
days of the week.

You should also consider downsizing your budget or
spending less. This can be something as simple as giving up cigarettes, your
morning cafe latte, or eating out less.

5. Set a budget and
debt payoff plan you can stick to.

Now that you have a complete, detailed picture of your
financial status, know how much money you need to cover your needs and monthly
debt repayments. Having a set budget and debt management will help you stay on
track, no matter your goal and timeframe.

Be patient and stick to your

Getting rid of debt is no mean feat. But with patience,
diligence and determination, you can definitely succeed. Once you’re done, you
can move on to fulfilling your other plans.

These can include enrolling in a business course and becoming an entrepreneur, learning a
new language or traveling overseas. Whatever your future plans, you’ll be sure
to accomplish them by taking control of your finances now.

— — —


Oli Kang
Oli is a working mum who has a passion for teaching and all things educational. With a background in marketing, Oli manages the digital channels and content at Courses.com.au.




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