At one point in life I found myself overwhelmed by debt and began to wonder how I could clear it within the shortest time possible. Being in debt brought constant worries to mind. I was never at ease with myself when that due date of the balance payment was approaching. Whether it was credit card or consumer debt, I was in desperate need to find ways to clear it. At one point I even ended up doing jobs that I hated, just to raise money to pay my debts to keep my head above water. Clearing the debts fast provided a peace of mind with myself, and it gave a different direction in financial freedom. Here are a few things I did to clear my debt in one year and a few extra ways I wish I tried.
Paid More And More
Do not stick to the minimum balance payments for your debt. You have to stretch your repayments by paying more than minimum balance. Banks and lending institutions would want you to take as long as you can to repay a debt. This is how they make money.
However, you don’t have to play their game. Double or triple your minimum payment. Make adjustments in life so that you save more, then use that money to top the minimum payment. For example, you can give up the happy hours, bring lunch from home, and eliminate desserts in meals. You may even take a second job. Any bonuses you get from your employer, dash them into the debt repayment.
Ranked Up The Debts By Their Interest Rate and Snowballed Them
I took all the interest rates of the loans and started clearing the debt with the highest rate first. While keeping minimum payments on the other debts, I funneled my debt repayment to the loan with high interest rate until I paid it off. Upon clearing that one debt, I moved on to the next and used the same aggressive plan. This is called snowballing or the laddering effect.
You may also consider transferring high interest debts into the so called zero percent balance transfer. Take advantage of such options and any money you save through the introductory 0% APR interest rate, you put it back to the loan repayment. However, make sure that you are able to clear the loan before the introductory percentage on interest rate is over. Otherwise, thereafter, the rate may just be too high to bear.
Stopped Further Creation Of New Debts
When you are striving to clear a debt and free yourself from the shackles of high interest rates, you do not want to create another burden on the side. You need to learn how you can live within your means. At this point, I learned that I don’t need any stuff to be happy, but what I was seeking was financial freedom and peace of mind. Freeze your credit cards or lock them somewhere.
Looked For Part Time Jobs To Earn Extra Money
You can take up two jobs or seek for extra part-time jobs that will earn you something. Any money you get should go towards servicing your debt. When you have a time frame of one year to clear your debts, it is really an uphill battle, however, with the right approach and understanding of your finances, spending patterns, and how to cut back on expenses, you can play it smart. Learn to take every opportunity that comes your way and allows you to save some bucks; then use the saved amount to reduce the debt. Within that year I took on several different part time jobs. From working at a warehouse to working side jobs with some local carpenters.
The snowballing effect helps you make quick progress in paying your debts because all your efforts are set to tackle the heaviest burden of the different loans first. Avoid using approaches that seem to create another kind of debt such as borrowing from your 401k retirement account to repay your credit card debt.