Accessibility to credit money creates various types of loans in individuals' heads, be it car loans, home loans, education loans, or personal loans. If you are someone with any amount of debt, then this article is for you; let's explore unconventional methods to get a debt-free life.
The "Snowball Method," simply put, means paying off the smallest of all your loans as quickly as possible. Prioritise paying off a small loan more aggressively, whereas pay only the minimum required payment towards the larger loans. Once your small loan gets paid off, you can move towards paying the next loan with a higher balance.
Moving from the smallest to the most significant loans makes you celebrate the small win and feel the joy of paying off the loan. The snowball method is also effective as it shows you quick results.
Make a plan
Not having a plan is the mistake most people make, and that's where you can lose the game of debt. Get a plan to proceed with a debt-free lifestyle. Even having a rough plan works better than having no plan to pay off your debt. A plan keeps you on track, committed, and accountable with your payments.
Planning makes you understand and break down the amount of debt you might be dealing with to pay off. Start planning by setting a target date when you would like to pay off the debt, creating a sense of hurry to pay off the debt.
Reserve an income
Reserving an income doesn't mean you require to put your sleeping hours into a side hustle income. You can keep income from equity investment or job bonus aside to pay off your debt. The internet has made it easy to generate a second income, and you can offer your experience and expertise in return for money to pay off your debt.
The concept of reserving an income towards the debt has the objective of diverting any extra money to pay off the loan quickly.
Cut your expenses
Look for a room in your budget to pay your debt more quickly. Start with finding the category with the most expenses and one with the least important to your lifestyle. Cut the expenses in both categories, and you can divert all the least important categories into paying the debt.
You can focus on cutting expenses on wants without disturbing the purpose, such as the expense of coffee in the fancy cafe, which you can have at your house at much less cost.
Debt brings stress, and stress brings more health issues for your older version. Living a healthy life is the priority, and so is paying off debt quickly. Now that you know how to pay off debt quickly, you can manage your finances better and utilise the debt more significantly. Also, paying debt quickly helps build a better credit score and easily get a loan at the time of need.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com