7 Concrete Steps In Fast Tracking Debt Payment

Debt cut in halfDebt payment is a goal for a lot of American consumers. Having a consumer centric economy, people are predisposed to buying big homes, new cars and charge up expenses on credit. This has been a way of life that some people think this is the right thing to do. Only until they get the monthly statements and revisit the budget will they realize their wrong ways.

Budgeting is an important item in preventing debt. There are even budgeting techniques for lazy people but this should be more of an exemption rather than the rule. But budgeting is not the only tool in preventing people from getting in debt. There are a few more things that has to be observed in making sure the finances are in check.

As Statisticbrain.com shares that housing and electricity are the top two expenses at home, there are still consumers who are not able to manage their budget properly and find themselves in debt. There are also instances that can put a consumer in debt such as medical emergencies or losing a job. Losing some clients on a business venture can also be a trigger down debt country.

As people struggle to manage debt and find ways to stay afloat, there are actually ways and concrete steps to be able to get out of debt and make debt payment. It will not be as easy as it sounds but it sure beats staying afloat. It is better to work towards debt relief rather than staying in a financial situation where you are only one emergency away from declaring bankruptcy.

Fast track payments on debt

Steps to be able to get out of debt could be different from one person to another but there are common denominators between all of them. These are the things that has worked for most if not all.

Commitment and discipline goes hand in hand

Wanting to get out of debt is different from wanting to get out of debt and doing something about it. You need to be committed to your cause and ready to act on it. A lot of people wants to get out of dent but they are not doing anything about their financial situation. It takes more than will power but it certainly is a good start.

The desire to get out of debt and make debt payment has to be  a constant guiding objective and something that can push you to stick to your debt relief plans. Discipline plays an integral part in ensuring that you do not stray away for the program.

Do an inventory of all your debts

One of the actual work that has to be done is making an inventory of all the debt items. It is important to list down all pertinent details for each debt item. This can include principal amount owed, interest rates, payment history and even the repayment timeline. This can give you a quick overview of just how much your debt is and the extent of work to be done to get out of it.

Negotiate for an interest rate reduction with your lenders

This is something that not a lot of people know about. You can call you lenders and see if they can offer you a lower interest rate. This is usually done with credit cards. But you have to be very careful of how you word your request. It would be best to consider focusing on wanting to increase usage if the rate is lowered rather than letting lenders know you are having a hard time making debt payments.

Consider the Snowball Method

There is an increasing usage of this repayment method among consumers getting out of debt. Daveramsey.com explains this methos as he popularizef the program. It basically aims to pay off the debt with smallest balance and then move on the next smallest balance.As the consumer is able to pay off debts. the confidence level increases and the amount that can be used to repay other loans increases as well. Here is a video explaining the process.

Cut expenses accordingly

This has been mentioned time and again but is really an essential part of being able to make more debt payment. But the idea is to cut down on non essential items in the budget. Lowering down your expenses in food and medicine for example can backfire on the budget and bring  you in a situation where you face medical emergencies.

Negotiate with collections but insist on a paid off mark

There are instances that your debt has been sold to a collections agency. If this happens, one option you have is negotiating with the agency and see just how much they can knock off the original amount to settle the debt. But be very cautious with this method as it has negative effects on your credit report. Check if the agency can indicate that the account was paid off and not settled.

Increase income

There are few tips in increasing your income and this is also one of the pillars in getting out of debt by making a bigger debt payment. Lowering down expenses combined with an increase in income and earnings is a great combination in achieving your goal of being debt free. It frees up some dollars from expenses and adds more from income increase

Three prong income sources

Increasing income is usually done with three approaches.

  • Day job. You can look for ways to increase you income by getting more sales if you are on a commission basis or looking for ways to get a promotion and an increase. If there are performance evaluations that can bring in an increase in your pay, then make sure you are doing a great job at work.
  • Side job. This is usually a hobby that you enjoy doing which you can monetize. One of the simplest example is photography. if you love taking photos and you have the equipments, you might want to consider covering events or selling your photos online. This can be an extra source of income for debt payment.
  • Passive income. Investopedia.com defines this as income where the consumers does not have that much active participation. This can be in the form of investments in stocks or joining a business venture by being a cash contributor only. This is income from investments that you do not have to manage on a daily basis.

Be wary of pitfalls leading back to debt

As you work your way out of your debts, one thing you need to be careful about is backsliding and falling into debt traps. It could be as simple as understanding the pros and cons of using cash or knowing when to use a debit card and a credit card. It could also be knowing your weak spots that triggers impulse buying and staying away from these triggers.

Debt payment can be fast tracked to be able to enjoy financial freedom sooner rather than later. As there are steps to take in order to accomplish this goal, a consumer needs to be careful in getting back in his old ways and slipping back in debt. Once this happens, its back to square one and the process has to be repeated again.