Taking a loan is the easiest thing ever; however, paying it off is a massive deal. It isn’t a piece of the pie as it takes a lot of consistency, devotion, and smart planning. Not to mention, it takes away all your money in some cases. Wait… how?
Well, loans these days come with high-interest rates and because of that, the amount of loans usually doubles in a certain period. It is something that makes repaying the loan hard. Nevertheless, you don’t have to worry as I have compiled a list of ways to get rid of your debts without hurting your finances. Have a look:
Go for an IVA
The first thing that you need to do is get rid of aggressive debt collections. One of the reasons people with debts remain stressed is because their creditors use aggressive debt collection methods, making them more and more anxious. An IVA is a solution to all such problems.
An IVA, known as the Individual Voluntary Arrangement, is a legal agreement between your creditor and you that buys you time to pay off your debt. It also puts an end to the aggressive debt collections by your creditor. In case s/he makes a move, it would be a breach of contract and there would be a penalty for it.
Settle Your Interest Fee
As you know, the interest rate that comes with your debts makes repaying them harder. The interest fee doubles the amount of debt and that is one of the major concerns for most people. The way to handle such a situation is by settling down the interest fee.
Yes, you can do that by speaking to your creditor. You can either do it yourself or hire a financial expert to negotiate on your behalf. It may require you to disclose your financial condition but trust me, it’s worth giving it a shot.
Cut Back on Your Expenses
Cutting back on your expenses is mandatory if you wish to pay off your debts without hurting your finances. If you keep on spending lavishly while paying off your debt, you’ll be left with nothing at the end of the day.
Thus, it’s mandatory that you cut back on your expenses and start saving money. The amount you save from skipping the luxuries can be used to make debt payments. It’s a great way to pay off your debt without having to leave a mark on your finances.
Follow the Debt Avalanche Method
If you have enough monthly income as well as savings to pay your bills and debt, it’s the best thing ever. Simply choose a suitable debt management plan and stick to it until all the debt is paid off. The debt avalanche method is usually recommended to everyone in such a scenario.
It’s beneficial for anyone who has multiple debts to pay off. Not to mention, it handles the issue of interest rate smartly as you make minimum payments on all your debts and direct the remaining amount to the debt with the highest interest fee.
Increase Your Income
Last but not least, the best way to pay off your debt without hurting your finances is by increasing your income. When you have more cash coming in, it becomes easier to pay off your debt and that too, without having to spend your savings.
This way, your savings remain intact while you continue repaying your debt, taking the burden off your chest. Isn’t it a great thing? For this, you can either get some freelance work or you can invest your money in stock dividends and get your share from the profits.
Pretty simple, eh? Paying off your debt doesn’t necessarily mean it’s going to hurt your finances. All you need to do is smartly handle the situation and you’ll be good to go.