Six tips to accelerate debt reduction
Outstanding debt is not the most comfortable life companion, is it? If you are striving to get rid of a student or mortgage debt or reduce your credit card burden these tips can help you to do so without sacrificing your lifestyle too much.
1. Have clear motivation to maintain a budget.
Having a dream and financial reporting system are crucial keys to success when dealing with debt reduction. Formulate specific advantages of debt-free life that truly inspire you and start to question every spending.
To make sure your budget never exceeds your income organise your expenditure dynamics in one place on paper or Excel spreadsheet. Reveal the most expensive spending categories and think about the ways to cut costs. The contemporary market also offers plenty of applications to help you not only track and limit spendings but to invest as well.
2. Face the truth and prioritise your debt reduction.
Debt pit can bring a lot of stress, but in order to start moving toward financial freedom, you need to know exactly where you are. Put together your bills from smallest to largest, analyse the interest rates and determine you priorities. If you have several loans, focus on paying off the most expensive debt first. As for other loans — allocate monthly minimum payments in time to avoid additional fees.
3. Get rid of extra property
Maybe you have some high quality but unnecessary gadgets, furniture, sports equipment or any other items you don't really use? Selling them online or offline will not only add free life space but also help to accelerate debt reduction. Another cash generating option, which requires zero investments, is to rent your stuff and property.
4. Create emergency account
Having cash to cover emergencies is crucial when you repay debts. Credit payment delays due to unexpected expenses, such as medical bills or car repair, may hurt your credit history and add extra fees to your debt burden.
5. Raise your net profit
This tip is rather trivial but sufficient. Once you’ve acquired financial awareness, learned how to track and cut your spendings, maybe its time to figure out the new ways to boost income. Ask yourself if your current job represents the limit of your professional and earning ambitions. If yes, ask yourself whether you can get a second job or launch some passive income generating project.
6. Don’t forget to reward yourself
Keep in touch with your dream and celebrate each tangible step, which brings you closer to the debt-free life. Create budget-fit but inspiring rituals to mark your victory: a walk in a forest, beauty procedure or a cup of coffee on a roof.
