Posted on Monday 24 September 2018
This article is part of our Finance Hub.
In the best of worlds, nobody would incur any debts. Unfortunately, there are countless people who are up to their eyeballs in debt. Ideally, incurred debt is something which should be paid off as quickly as possible; yet, many individuals find themselves struggling to pay back the money they owe. The subsequent interest which often accompanies unpaid debt doesn't make matters any less complicated. Thankfully, there are a variety of strategies which can be employed in order to effectively pay off debt.
Make Ongoing Payments
Indebted individuals have a tendency to avoid their debt. The avoidance is often motivated by fear and reluctance to face the large sums of owed money. However, avoiding the debt will never erase its existence. The only way to free oneself of debt is to make ongoing payments. In this day and age, merely paying the minimum balance is not going to cut it. Payments should be made as frequently as possible. Each time an indebted individual receives a check, he or she should be putting aside a percentage of the funds (or a specific dollar amount) to pay off what they owe. Initially, this can be uncomfortable and may even require some budget modifications. However, repaying debt in a timely manner is always wiser than idly wasting time and allowing interest to accumulate.
Increase Income and Profit
Despite the massive pitfalls of failing to repay debt, a lack of funds is a problem which many people struggle with. Therefore, individuals who literally cannot afford to pay down their debt should strive to increase their income. This can be done via asking for a raise, advancing one's career , or even starting work in the gig economy or freelance market to create an additional stream of revenue.
Live Within Your Means
Countless people incur debt in their attempts to live above and beyond their means. While this type of money management is irresponsible and reckless, it's particularly dangerous for individuals who have yet to repay owed funds. Anyone who is struggling with debt should proactively work to lower their expenses; this can almost always be done. Cutting back on unnecessary purchases, eating at home, and limiting entertainment fees are some prime examples of ways to reduce costs. Some people spend their entire lives in debt all because of poor money habits.
Having to repay debt is no fun whatsoever. Debt holds people back from financial success, home ownership, the ability to live independently, and many other opportunities which life has to offer. Those who are able to take advantage of certain opportunities, even in spite of their debt, will not have the same quality of experience as their debt-free counterparts. To make a long story short, debt should always be avoided. In the event that avoidance is not feasible, repayment should occur as quickly as possible.