Debt and monetary worries may distract you from achieving your life goals. Whether it is credit card debt, student loans, or home renovation loans, you must clear it timely. Most individuals avoid turning to debt due to insufficient cash availability.

Aspects like emergency cash requirements may further affect debt payments. So, if you are struggling with paying the dues and end up rolling it over, read ahead. The blog lists the best ways that may help you get out of debt quickly.

Identify the basic amount you can keep safe from your savings every month. You can use it to pay the dues one by one. If not whole, at least try to prepay the minimal amount after discussing it with the provider. Read ahead to learn the next steps to pay the dues.

What type of debts should you pay first?

As an individual, you generally hold two types of debts- secured and unsecured ones.  However, some dues must be paid timely. These are known as priority debts. Here are some debts that you must pay first:

1. Council tax

It is an annual fee that you pay to your local authority based on the home’s value.  The amount also depends on the number of individuals in the house. You generally pay these dues in 10 instalments which you can exceed by 12 if needed.

1. Court fines

A court fine is a financial penalty that a judge imposes after the hearing. The authority decides the amount you must pay according to the grievances the victim faces. You must pay the fine by a certain date.

c)     Gas and electricity bills

Some bills come with a specific date to pay. For example- utility payments like gas and electricity host a payment date. You get the bill early, so you can budget easily. Thus, you must settle this on a priority basis. Not paying one may also affect your credit rating.

5 Strategies to get rid of debt in a financial-friendly way

Understanding your total debt amount is important. Request an updated credit report and calculate how much you owe. Contact your creditors to clarify the pending amount. It will help you analyse your debt-to-income ratio i.e., how much you spend monthly given the income and debts. Add up the debt payments and divide it by the total monthly income. It will help you get the minimal amount you must pay on each debt. Here is what to do next:

1)     Consolidate your debts

Merging debt into a single payment reduces the burden. It simplifies the debt management and promotes savings. Options like debt consolidation loans help you pay multiple pending payments at once. Identify the most expensive ones to consolidate first. It may include credit cards, payday loans, overdrafts, etc. Calculate the interest you pay and what you owe after consolidation.

You may also consider a debt consolidation loan for bad credit with no guarantor requirement. It is especially helpful when you lack sound credit but don’t want to involve anyone in the payments. It will help you pay the costly dues at once at a better interest rate. You may reduce the rate by fetching it for a small term within which you can comfortably clear the dues.

2)     Remortgage to a lower interest

Remortgaging your debts is one way to benefit from the low interest rates. Switching to a lower one helps you pay fewer monthly payments and overall due. Check the current interest rates in the economy. If you have a mortgage, you can consider this approach. Check whether you may benefit by remortgaging your current mortgage payments.

However, it is an ideal approach only if you must continue the payments for a year or two. If the mortgage agreement is ending soon, you may not benefit from this. Moreover, you may expect to pay more costs instead. A remortgage may also help you save money.

3)     Try to increase your income

It is also one of the most important aspects that may help you get debt-free quickly. Sometimes, your current income proves insufficient for your debt payment. Thus, check the aspects that may help you increase your income.

You can apply for part-time jobs, sell unused items, or rent a space. Next, identify and repay the dues from the savings from multiple incomes. However, if you find an emergency and lack funds, don’t worry. You may pay for the emergency by considering other options. You may get options for low-income as well.

For example, you may spread the payments over a year. Check 12-month loans with no guarantor requirement. It helps you manage the emergency without worries. You don’t need a guarantor for that.  Identify the amount you can repay every month without trouble.

4)     Create an emergency debt fund

An emergency fund is a savings account that helps you save money for uncertain times. Saving a particular amount every month for 8 months straight helps you create a surplus. You can only tap it a few times to withdraw the sum. Here, you can consider one to save for debt clearance.

Identify the total amount you owe and how much you must pay per month. Consider saving that much amount in the emergency fund. Alternatively, you can decide to pay the minimum on each debt and save accordingly. It reduces the saving liabilities for you.  This strict and disciplined way of saving may help you clear debt quickly.

• Negotiate the deal with your creditors

Identify the best aspects that may help you reduce the debt burden. Your creditors may agree if you have been regular with bills. However, your circumstances prevent you from repaying the bill in a timely manner. He may understand that and accordingly help you get rid of the debts. He may analyse your repayment capabilities and provide you with an alternative plan. It helps you repay the dues without affecting your basic budget.

Don’t avoid or hesitate to talk to your creditors for help. It delays the process of payments and leads to additional penalties. Therefore, try if they could reduce some amount. Accordingly, re-analyse your finances and reduce additional expenses. It will help you save money to pay off the debt.

Bottom line

These are some ways to get out of debt without worries. Analyse the best strategy to repay the debt. You can either begin by paying the most expensive debt first.  It will help you clear the debt quickly. Alternatively, you can also begin by tackling low-cost debts first. Understanding the best ways to save money to repay the debt without worries.