6 Ways To Reduce Your Personal Debt

6 Ways To Reduce Your Personal Debt

Debt, Nigeria, Foreign
BDO explains the types of options to deal with debt

If you have debt, then you need to work towards reducing that debt. Fortunately, getting out of debt is easier than you might imagine. Check out six different ways in which you can reduce your personal debt.

Increase your monthly payments

If you start increasing the monthly payments on your debt, then you can reduce your debt quickly. While this might seem like a lofty goal, it might be easier than you imagine. It all starts by going through your finances carefully. Determine your monthly expenses and your income. Then, find out how you can increase your monthly debt payments.

Although you might need to give up more frivolous expenses, you can benefit greatly from increasing your monthly payments. Consider giving up your daily coffee from the local shop. If you eat out frequently, then start eating at home more often. Use the money you save to pay your debts.

Be proactive

You need to take matters into your own hands. If you speak directly with a creditor, then you might be able to get a lower interest rate. Your creditors want you to pay off your debt. It’s how they get paid. Therefore, they might be willing to help you make your payments. You can talk about debt settlement and what that might entail. Make a few phone calls and find out how far your creditors are willing to go.

Take out a small personal loan

Sometimes, you need to obtain more debt to get out of debt. While this might sound counterintuitive, it can be quite helpful.

By taking out a small personal loan, you can pay off one of your debts in-full. You need to do so with care. Specifically, you need to make sure you have a good interest rate on your loan. Check out a review of personal loans before you choose your loan.

Consider debt counseling

Debt counseling could be a good option for you. When you work with a credit counseling service, you might need to wait a few years before you are debt-free. However, the wait could be worthwhile. After about four years, you might have a debt-free life.

When you go through debt counseling, you get lower interest rates and a different minimum payment. The new terms could be much easier for you to repay. Instead of letting your debt pile up, you can start making a difference. The credit counseling agency does most of the work. Therefore, you have a smaller chance of making a mistake.

Be smart with your money

One of the best ways to reduce your debt is to be smart with your money. If you don’t already have a budget in place, then you should create one. When you stick to a budget, you can save your money or prevent more debt. In either case, you can improve your finances.

Take from your retirement fund

If you have a retirement fund, then you should consider withdrawing from the account to pay for debt. The money could remedy your situation. However, you should be careful. The early withdrawal penalties could hurt you. Before you withdraw from your retirement, consider the consequences.

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