Financial problems can invade your thoughts on a regular basis and it can seem you are almost constantly stressing about how you can find a way to get yourself out of the debt situation you find yourself in.
What is needed is a plan of action and something immediate you can work on to improve your situation and start thinking about something else other than how much you owe.
Here is a look at some strategies and tips that could help you clear a path toward a less troublesome financial future, including why it pays to set some targets, a proven strategy for paying debts off quicker, plus how a boost to your credit score can help.
Focus on the finishing line
It can be easy to get an advance quick when you need it and have to pay some bills in a hurry before you next get paid but these short-term fixes are only a temporary solution and the aim has to be to work on a plan that clears your debts over a period of time.
Many people in debt tend to drift from one month to the next paying what they can in order to keep everyone happy, without really having any specific focus on what they need to do to clear their debts and start afresh.
To use one analogy as an example, if you start saving money in a jar for a special event like a holiday you can be motivated to see it through to the end because there is a reward for your efforts and you are likely to stay motivated when you see progress being made and the jar starting to fill up.
The same sort of thinking can be applied to getting yourself out of debt.
Work out exactly how much you owe in total and then work out a plan to clear that balance over a period of time. If you keep a running total of how much you have paid off and see your debt balance reducing, this should give you the encouragement and motivation to see it through to the end.
If you can see you are making progress this can ease your mind and make you feel like you are more in control of your debt situation.
Tackle the most expensive loans first
As a debt reduction strategy, this suggestion is a real no-brainer as it can make a big difference to how quickly you pay off your debts and how much you pay back if you target the most expensive debts.
If you are paying the minimum balance on a credit card that is charging you something like 20% interest on the balance and you have a loan charging you half that figure. It makes a lot of sense to prioritize the credit card balance and pay any extra money you have off of that balance so you clear it quicker and pay less in interest charges.
You will probably be very surprised to see how much you can save in interest charges overall when you work on clearing your debts in order of the most expensive borrowing first, plus you should get out of debt quicker using that strategy.
Keep up to date with all your payments
Even if you are prioritizing certain debts you need to make sure you keep up with the minimum required payments on all the other loans you have.
One of the positive aspects associated with clearing your debts is that your credit score should improve, especially if you make sure you don’t miss any payments to undo the hard work.
When your credit score is higher that can often give you access to better deals and cheaper borrowing, so you might even be able to get accepted for a zero-percent balance transfer deal, for example, which would allow you to transfer a debt from a more expensive credit card and save on interest charges.
Get out of debt quicker
The ultimate aim is to get out of debt quicker and ease your worries, so you need to find a few ways to help you achieve that goal.
Creating a monthly budget and keeping track of your spending is often critical to how successful you are in clearing your debts as quickly as possible.
If you know exactly how much you are spending and find ways to reduce your expenses where possible, this can free up some extra cash each month which can then go toward paying down more debt.
Taking on an extra job and selling unwanted items are also ways to boost the cash you have available to clear your debts and all of these initiatives will get you closer to being free of debt quicker than you might have imagined.
Keira Bevan is an accountant who loves to help people make the most of their money. You can find her debt-reducing insights on a variety of personal finance websites.
