How Do I Get Out of Debt?

Getting out of debt as quickly as possible gets you on the right path to proper financial stability. There are some effective tricks you can consider if you want to have more control over your debts. They include the following:

Scale up Your Monthly Repayment Installments.

Most credit card companies only demand 2% of the existing debt every month. Such a modest figure may sound appealing to card holders, but it does not prevent you from sinking into a debt cycle. Setting aside a higher percentage of your paycheck has more impact in reducing your outstanding debt. For example, using 15% of your monthly check pays off larger chunks of the debt while still saving you more on interest payments. Keeping the interest obligations to a minimum ensures your total debts remain manageable.    

Explore Debt Workout Agreements.

Your card issuer may approve a debt workout agreement by lowering your current interest rate. Depending on the nature of your request, card issuers wouldn’t mind temporarily waiving the interest charge. Whenever your financial situation takes a sudden downturn, be eager to call the card issuer and negotiate steps to help you keep up with your repayments.      Debt workout agreements are similar to hardship programs. Some card issuers offer hardship programs to cater for customers who suffer unexpected injury or illness, retrenchments and sudden job loss. In effect, the card issuer reduces interest rates and suspends the late fees for a limited period. With the hardship program, you can keep your debts at bay while you recover from sudden financial setbacks.

Request a Credit Card Balance Transfer.

Most people brush aside those mailbox offers to transfer their credit card balance to a different company. However, credit card balance transfers are still extra fuel for your debt reduction journey. Transfer the high interest rate debts to a lower percentage company as some of these can even offer 12 months of zero interest. Lower interest rates will free up more cash flow for you to shave off some of your credit card’s outstanding demands. Lastly, remember to check the terms and conditions carefully to separate the good deals from those that have hidden costs.

Claim Funds from Your Life Insurance.

Another option that can pluck you from a debt spiral lies in your life insurance policy. Request a check for the cash value of your life insurance policy to pay off your debt. This strategy also gives you a convenient way to dig out of debt in one swoop. Whenever you feel that your debt is getting out of hand and you do not have beneficiaries who can utilize your life insurance policy, use those funds. Do a fresh audit on any insurance policies you have that may carry cash value. Opting to divert life insurance funds to clear off debts does not apply if your life insurance is a term life policy. Only whole life insurance policies work because those accumulate cash value over the years. Furthermore, even if you have beneficiaries that qualify for your life insurance proceeds, you can claim part of the cash value and leave some for the beneficiaries. It is an effective way to ensure that your beneficiaries are not burdened with your debt obligations. Achieving a debt-free life does not have to be an overwhelming experience. You can sign up at Shiirs to get more ideas on how to manage your outstanding debts.