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7 Strategic Ways to Accelerate Debt Payback on a Limited BudgetOctober 5, 2017
One of the hardest things in the world is getting out of debt – especially when you have a limited budget. If you have a number of other bills and little funds, paying back debt can seem like a pointless task. It can also be very frustrating if most of your payments go towards meeting interest obligations – something which is all too common for people who have a mountain of debt.
Nevertheless, it is extremely important that you make at least a small payment every month to regularly put a dent in your debt load. For your benefit, we’ve compiled a few tips to help you get out of debt, even on a small budget.
- Chalk Out a Plan: This is the foremost step – you must first make a list of all your creditors and determine how much you owe to each of them. Then, depending on the balance and interest rate of each loan, decide which one you’d want to pay off first. (Click here to learn more about in what order you should pay off debt.) The idea is to at least pay off the minimum due on each loan and dedicate the remaining budget to a single loan that you’ve prioritized.
- Create a Budget: By doing this, you can figure out how much money you’re spending each month on necessities like car insurance, rent, groceries and gas, and expenses like eating out and entertainment. Once you put these figures down on paper, you’ll have a better idea as to how much you can afford to put towards paying back your loans.
- Reduce Your Expenses: This might sound obvious, yet most people have a hard time accomplishing it. Nevertheless, if you don’t minimize nonessential expenses such as eating out, you may never get out of debt. You can also reduce more essential expenses, such as groceries, by looking out for coupons in newspapers, and car insurance, by trading in your car for an older model.
- Set Up Automatic Deductions: We often tend to find excuses to avoid making our debt payments. One way to take care of this problem is to set up automatic payments, which will deduct a certain amount of money from your bank account every month. This will also ensure that you stick to your budget, as you won’t have any extra money to spend on unnecessary items.
- Increase Your Income: Though it might involve some hard work, you can substantially increase your income by getting a second job, doing freelance work, starting a small business, or even selling things you don’t need on eBay. These can go a long way in providing extra money to pay off your debt.
- Pay on Time: We can’t stress on this enough – if you have substantial credit card debt and you don’t pay on time, you’ll not only have to make a double payment next month, but also pay a late fee - an amount which could have easily gone towards paying down your debt. Moreover, if you are late two times in a row, you may be penalized in the form of an increased rate.
- Request Your Creditor to Lower Your Interest Rate: If you’ve consistently paid your bills on time and have a good credit score, your creditor may reduce your rate. This way, a lesser amount would go towards interest payments and you’ll be able to pay your debt off faster. If your lender doesn’t agree, try switching to another card with a lower rate.
There are a number of creditors who are willing to loan money at extremely low rates of interest, as long as you meet their credit profile requirements. By putting in a little bit of effort, you could easily find someone through whom you can reduce your debt load by getting a lower interest loan.
In fact, at Fund&Grow, we help individuals get $50,000 - $250,000 of unsecured credit at 0% interest for a period of 6, 12 or 18 months. This amount can be used for anything - from making the down payment on a property to funding a business. Thus if you know someone who needs this kind of financing, call us at (800) 996-0270 and we will help them out.