Whether it is credit card dues that are attracting extravagant interest charges or a high interest home loan, shouldering debts can be hard to manage. However, you can tackle it in various ways that suit your unique circumstances. From taking a debt consolidation loan to venturing into the freelance landscape to increase your income, you can choose to decrease your debt burden in many forms. Nevertheless, getting out of debt quickly requires not only effective measures, but also a comprehensive plan with a clear approach.
Here are seven top ways in which you can tackle debt quickly.
Work out a monthly budget for all your expenditure. Include essentials like the amount you need to set aside for grocery shopping and fuel and the not-so-essentials, such as the cost of eating out each month. With a budget to abide by, prioritise debt payments and let go of extravagant or luxury spends. Once you’ve set limits to your home- and leisure-related spends, you will always have a dedicated portion of your income free. You can then use this to repay debts.
When handling debt, it's important that you have a strategy in place. Some people prefer to reduce interest payments by clearing the highest APR borrowings first. Others prefer to grow by little victories and pay off the smallest debt first. Known as the avalanche and snowball methods respectively, both of these approaches are valid and help you be specific and targeted in your approach.
Identify borrowings that are impinging your financial health and see if you can refinance them with another lender. This method helps you side-step the inflated rate of interest you currently incur. Home loan and credit card balance transfers are examples of refinancing techniques you can use. However, work out the transfer costs and carry this out only if you find it affordable.
Paying the minimum dues on your credit card bills will help you avoid penal charges. But, if you make this a practice, then with each bill your interest charges on the remainder is bound to grow. So, try paying credit card bills in full and if possible make a part-prepayment on your loans. This will reduce your overall debt and interest obligation considerably.
Monthly income is of paramount importance to debt repayment. As such, any bonus or raise will be helpful for you. However, you can also take matters into your own hands by venturing into a side hustle, be it committing to a few photography sessions a month or writing a handful of blog posts for a magazine every week. Increasing your income will help you get access to more cash, which you can use to repay your debts faster.
Tampering with your investment or selling of your assets may not be the best practice, but in the absence of additional funding you can consider these securities to tackle debt. You can use an FD to pay off a loan that’s threatening to snowball out of control or choose to restrict setting aside a portion of your income for investments for a while. In any case, such tactics work only when the benefit of getting out of debt quickly outweighs the profits gained via investments.
Another way to get out of debt quickly is to borrow a debt consolidation loan. Though this may seem counterintuitive, this works primarily because debt consolidation loan benefits include a lower cost of borrowing and a lengthier repayment term. Since debt consolidation loan interest rates are more economical than those you incur via existing borrowings repaying this new debt becomes easier on the pocket.
One loan you can avail is the Bajaj Finserv Personal Loan for Debt Consolidation. Here you can get a collateral-free sanction of up to Rs.25 lakh on nominal interest rates. Further, you can repay the loan EMIs via a flexible tenor ranging up to 60 months. Moreover, you can qualify for this loan quickly on straightforward eligibility terms and access it hassle-free by submitting minimal documentation. On successful approval funds get disbursed to your account within 24 hours. To get instant approval via a customised deal all you need to do is check your pre-approved personal loan offer.
Now that you know these tips and have a debt consolidation loan handy, tackle outstanding dues gracefully and put mounds of debt behind you quickly.
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