If you were wondering what the top 5 fastest possible ways to pay off debt are then here are some tips for you. Debt management is more about paying off your debts but rather should come in to play before you even take out any loans. However, if you are already in the position where you have debt and you want to pay it off fast then here are some solutions for you.
As painful as doing budgets are, they are the best thing that you can do if you are in debt. This way you will be able to track your money. You will therefore be able to calculate your disposable income and allocate amounts to paying back your debt.
Stop borrowing money
Unless it is a crisis and you absolutely have to borrow money, then do not purchase anything on credit. This way you will be able to manage the exact amount that you will have to pay back on your debt. Of your disposable income, you should allocate amounts to pay off your debt as well as savings. This way should there be a crisis, you will be able to take money from your savings to pay off any of the expenses associated with the crisis and will not have to loan anymore money. The best idea is to save enough to cover a few months expenses so that should you for any reason lose your job or have a serious financial expense, you will be covered.
Investigate before you borrow again
If for any reason you do need to pay for something urgently, make sure that you compare loans offered in terms of the interest you will have to pay, the installment period that you will have to pay the money back in, and any other terms and conditions that may apply. What is more is that you will often find deals that offer no interest or low interest and these attractive deals may sound like the best deal. However, these deals terms and conditions are the tricky bit as they often have penalties and fees that can leave you in a worse situation than you were in before.
Get a debt management plan
The easiest way to get in to trouble with debt is to let it control your monthly payments. Therefore it is essential that you do not try and pay off your debt fast so much so that you leave yourself without enough money for the month and therefore spend more on your credit card. One way to ensure that you aren’t paying too much is to develop a budget as mentioned above and make sure that you cover all your expenses so that you do not have to pay for anything on credit unless it is an emergency. Finding that perfect pair of shoes, or that new electronic device, is not an emergency. If you really want the shoes or the electronic device , then you will have to save for them as long as you are not taking money away from what you need to pay on your debt.
Reduce the amount of debtors you have
One way to pay off your debt quickly is to get a debt consolidation loan. This way you can pay off all of your creditors at once and then only have one creditor that you have to pay each month. Although it might sound strange to take out a loan to pay off a loan, you will not be taking out the loan for more than what your debt is currently worth. What is more is that you will not have to pay separate interest on the various loans, but rather you will pay interest on one amount which makes it more cost effective in the long run.