Wednesday, April 17, 2024
Finance

Coping with Debt: 5 Excellent Strategies to Get Rid of Debt Within a Year

Many people struggle with crippling debt, but because of a serious lack of awareness and knowledge about coping with debt, they can’t find a way out and have to give up their financial goals and dreams. If you have finally made the decision to do something about your situation and get rid of all of your debt you’ve come to the right place. Here are five excellent strategies that will help you get rid of all your debt within a year. 

Try to Increase Your Income

The more money you have to direct towards debt repayments the faster you will be able to get rid of your debt. So, it is important that you try and increase your monthly income. Start by exploring different options including a part-time job, a side hustle, or an online business. You can also try your luck with electronic trading, however, be careful because it can also backfire and leave you in an even worse financial situation.

Negotiate for a Lower Interest Rate

If you are consistent and on time with all your bills, rent, and debt repayments you can ask your creditor to give you a better interest rate on your debts. This will help you save a lot of money that previously went to high-interest debt repayments. You can also hire a credit counselor who will negotiate with your creditor on your behalf. If you don’t exactly know how to go about this process it’s best to hire a credit counselor rather than trying to do it yourself.                                                                                                                                                         

Cash in Your Life Insurance 

Every month you have to pay a lot of money in interest fees. If you want to save some money and stop paying these high-interest fees you can cash in your life insurance and use the money to pay the highest interest debts. However, you need to remember that this strategy will only work with a whole life insurance policy. So if you own a term life insurance policy you are going to have to look for other alternatives. 

Consider an IVA

In layman’s terms, an IVA is an agreement between you and your creditor where you can start paying off your debt slowly at a much more affordable rate. You need to know all the details about IVA before considering it as an option. However, not everyone qualifies for an IVA. You need to have a sustainable and regular income source or enough money to make a lump payment to your creditor upfront. 

Use Your Tax Refund Check 

Many people use their tax refund check to go on a vacation or buy something that they’ve had their eye on for a while. However, you should be smarter about your money and use the refund check to pay off your debts. Once your debt is gone you will have enough surplus money every month to start setting aside for a mega family vacation. 

Conclusion: 

In order to achieve financial stability, you need to get rid of your debt as soon as possible. The above-mentioned strategies have time and again proven to be useful for people and have helped many beat the odds and get rid of their debt within a year. So, stick to them and be consistent if you want to see results. 

Aditya Shahi

Aditya Shahi is a BSc Agriculture student and an avid blogger, passionate about sharing his knowledge and experiences with his readers.