There are plenty of debt management plans that can help you get rid of your debt. However, not everyone wants to follow a strict debt plan. In fact, they want to customize a debt plan as per their needs and it’s perfectly okay.
If you wish to have a debt plan of your own, you’re at the right site. With a few lifestyle changes and some clever tricks, you can effectively eliminate your debt. It is like having your own customized debt plan. Let’s have a look at the step-by-step guide I’ve prepared for you:
Make Minimum Payments on All Your Debts
If you have multiple debts hanging on your head, you must never ignore any of your debts. Thus, you must make minimum debt payments on all your debts every month. In this way, the interest rate won’t affect you much.
This process is known as the debt avalanche method. It caters to all your debts at the same time while providing you with a disciplined approach to your finances. Also, make sure you have an adequate amount of money in your account for this every month.
List Down Your Debts in an Order
It’s great that you’re making minimum payments on all your debts but that still leaves the issues of interest rate behind. It isn’t unaddressed but you’re not addressing it properly either. Thus, you must list down all your debts in order as per the amount you owe and the interest rate.
The debt with the highest interest rate should be on top of your list. The money that you are left with after making minimum debt payments on all your debts should then be directed towards the most crucial debt, the one with the highest interest rate. It will help you save money in the long run.
Find Extra Money to Make Debt Payments
If you keep paying the minimum on all your debts, it will not only cost you time but money as well. As mentioned earlier, the interest fee would keep on growing and you’ll be left with no choice but to pay more than what you owe at the end of the day.
Thus, you must speed up the process and you can only do that by finding extra money to make maximum debt payments. For this, you can either invest your money in investable stocks and take your share of the profits or start freelancing and make some quick cash.
Open a Savings Account
Having a customized debt plan means straightening out your finances. That’s right, guys. Paying off your debt doesn’t mean you’re going to have empty accounts. When you’re making more money, you should also think about saving more of it.
For that, you must open a separate account for your savings and add a considerable amount of money to it every month. It will ensure that you don’t go bankrupt once you’re done paying off your debt.
Lastly, please don’t forget to check with your bank for their policies regarding quick debt payments. Also, let a financial counselor talk to the bank on your behalf. It’s always best if you let a professional deal with the issue. I wish you all the best, my friends!