Taking loans and credits is not a bad thing if you know how you can manage them. Often times, people find it very hard to get out of debt. They devise all sorts of tactics, yet they will still be trapped in the problem.
Getting out of debt can signal your way to financial independence. You should strive as much as possible to pay off your debts as at when due.
Getting free from debt trap can improve your lifestyle and health, you can use the money ought to be used to pay debt for savings and investment and you will stop living from hand to mouth.
Strategies you can use to pay off your debt
In my research about debts, I observed the strategies used by a lot of people who successfully got out of their debt traps. I will share the strategies below:
Move to a cheaper apartment
To pay your debts, you may need to move from that upscale area to the suburb. Take New York for instance, the cost of rent of a 3-bedroom apartment can be very high while in Maryland, a short distance away, the cost of rent can be significantly lower.
A chronic debtor can use this strategy to free himself from the trap of debts.
Sell some of your assets
Selling some of your assets may not be a bad idea if you owe some monies. Look at the assets you do not really need, sell them and pay back your debt.
We have a lot of things littering our homes that we do not need. Even, if the assets you have are what you really need, it is better to live a debt free life than having creditors harassing you around.
Ask your creditor to reschedule the loan
If you are about to miss the debt payment deadline or you have already missed the deadline. You can write your creditors and ask them to reschedule the payment terms of the loan. Most creditors will be happy to do it; so far they know that you are financially incapable to pay down the debt now.
Use a more efficient car
Some cars can be more efficient than others. Efficiency of cars is rated in the areas of fuel consumption, mileage before repairs and engine efficiency.
A car that is fuel efficient will cost you less to maintain. If you are a debtor riding cars that are not efficient, consider changing them for more efficient ones.
Ask your creditor to reduce the value of the debt
If you are neck deep in debt, you can ask your creditors to reduce the debt burden. A debtor may ask his bank to reduce his debt profile by 10-20%. If the bank really knows that the debtor cannot pay, the debtor’s request may be considered.
It may be more expensive for the bank to hire debt collectors and lawyers to chase up the debtor for payments.
Use litigation strategy
This strategy may not be too ethical but it works. A chronic debtor may engage the services of a good lawyer to file suits against his creditors.
Lawyers may use litigation tactics to arm-twist the creditors to agree to a deal in favour of the debtor.
Get on side hustles
Earning more income will help a debtor to pay part or all of his debts. Side hustles can be very rewarding if you know what you are doing.
A debtor may engage in freelance writing, web design, digital marketing and programming. You can combine these jobs with your day job. All what a debtor needs to start freelancing is to have an internet ready computer, skills of getting the job done and the ability to get leads.
Work harder for a raise in your salary/performance bonus
A debtor who knows he has a lot of debts can work harder so that he can get a pay raise or performance bonus.
Any increase in income of a debtor can help him in settling his debts.
Shun expensive processed foods
Do you know that healthy fresh foods are in most cases cheaper than expensive processed foods that can mess your health up.
I know a man who paid his debts by shunning unhealthy processed foods. He bought fresh foods from farm markets and he was able to save 10% of his monthly income. The savings was deployed to pay his debts.
Start a business
Starting a business can be risky and may further compound your debt problem. However, if you are sure that you can make good money from a business you know well. Why not give it goal, make sure you do not take more debts to run the business.
Avoid taking further loans
Taking further loans or debts will further compound your debt problem. If you will take any loans, make sure that the loan will be used to restructure the existing debts.
You can take a cheaper loan to service a more expensive loan.
Return your credit cards
Having credit cards in your pocket may tempt you to continue to spend, despite the level of debts you have. Returning all your credit cards is a good way to stay out of further debts and concentrate efforts on how the current debts will be paid.
Enroll your children in cheaper schools or public schools
That a school is expensive does not mean that the school has a great standard. You may consider enrolling your children in cheaper schools if you are in debt or you are trying to pay down your debts.
The money you will save by changing the school of your children can be used to reduce your debt burden.
Holiday in less expensive locations
Are you the type that likes to go on holiday every summer in expensive locations? If you are in debt, you can consider going on holiday in cheaper locations. This will save you good money that can be used to reduce your debt load.
Buy used clothing
A friend of mine who owed some debts last year stopped buying new expensive clothing. Instead, he started buying used clothing. I was shocked when he told me the amount he saved as a result of this strategy.
My friend was able to free himself from debts. Thanks to this strategy.
Declare yourself bankrupt
Though, this may be painful. If you do not have any options again to pay your debt, you can declare yourself bankrupt. After 2 years, you will be discharged and you can go back to your normal life.
Do you know any strategy debtors can use to free themselves from debts? If yes, let us continue the discussion in the comments section.
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