There are many reasons for a person to go into debt. They might have acquired it during schooling when they had to avail of student loans in order to finish their studies. They might have gone into debt because of an emergency. For example, they had to pay medical bills for an accident or they had to help out the family or they had to compensate someone for say a car accident. Or people might have gone into debt for their business to establish it and keep it going. Or people simple has debt on their credit cards. Whatever the case, being in debt is not a good thing.
One of the most important things in life that you have to be is debt-free. If you have it, you cannot save up. You cannot be complacent. You cannot be completely free. However, there are good debts and bad debts. Good debts are those that you have because you are putting the borrowed money to good use, preferably to make you more money. Bad debts are the ones that you don’t want to have because it is the one that hinders you from financial success. In light of this, we have gathered the sure ways you can get rid of bad debts so you can live your life freely.
1) Postpone Contributions
The reason why debts are so notorious is because a not so little thing called interest. The longer you are in debt, the bigger is the amount that you have to pay. So, in order to minimize the damage that interests will cause you, you can redirect your money flow to the debt first before contributing your investments. The sooner you pay off your debt, the sooner you can start investing again without the worry of incurring more interest.
2) Consolidate Payments
If you have a debt that you pay via credit card, consider doing this: use the credit card with the smallest interest rate. If you have several credit cards, it is possible that their interest rates may vary. To make it more convenient for you and much more cheaper, try asking the credit card providers to transfer your credit to your credit card that carries the lowest interest. While not all banks allow this, there are ones that will let you do it. This way you can concentrate and pay them off quickly. In case one credit card cannot carry all your debt, try debt snowballing.
3) Settle Beyond the Minimum
People must remember this: the longer you are in debt, the more you have to pay. The best solution is to pay it as fast as possible. One way to do this is by paying more than what you are required of to minimize the interest collection. If you can, always pay the maximum. Again, the sooner you are out of debt, the sooner you are free from the grasp of interest rates.
4) File for Bankruptcy
If worse comes to worst, you can always file for bankruptcy. Filing for bankruptcy will relieve you of your debt but, of course, with a price. The court will seize your property and belongings to satisfy your debts. While there are various laws that are implemented in each state, most of them won’t leave you bare. Some states let you have cheap cars, equity in a house, and some tools for a business. It will be hard but at least it won’t get worse and you can start all over again.