10 ways to get out of debt
1) Create a budget to first identify where you are spending your money, including all spending, food, clothes etc.
Establish what interest rates you are paying on each loan and the term of the loan.
It comes as quite a shock to people that car loans can be twice as expensive than house loans.
2) Once you have established the highest interest rate – pay more off this first, whilst paying off the minimum off the other loans.
When the first one is cleared, start on the next loan, and so on.
3) Control your spending, so that you can pay off more each month.
As your loans start to shrink, you will feel more confidence and pride in what you are doing.
Success in clearing one loan will result in you becoming more motivated to clear the next one.
4) Cut up your credit card. Enough said.
5) Earn more money. There are many ways you can do this, such as:
* Ask for a raise – nothing ventured, nothing gained * Work longer hours
* AIR BNB
* Part-time job * Babysitting
* Look for a promotion
6) Ask your lender for an interest rate reduction. Absolutely nothing to lose.
I recently met a man who was paying 4.3% on his mortgage,
he threatened to move his loan and the same bank gave him the introductory rate of 3.5%, a huge saving on a 20-year loan.
7) Credit card balance.
Switch providers and invariably they will give you 6 months with no interest payments, possibly enough time to make a dent on another loan.
8) Stop creating more debt.
Be conscious of your spending. Stop impulse buying. Some people will not spend over €100 unless they think about it for a week.
It really stops impulse buying.
9) Start a spending diary; record all spending, so that you can identify the leakages.
Once the leakages have been identified you can take remedial action.
10) Save a portion of your salary, so that the next time an emergency happens you will have an emergency fund and not fall into the trap of borrowing again.
This practice is also great for your stress levels, as it removes you from the curse of impulse borrowing at higher interest rates.