Debt – it might be a simple four-letter word but when one finds themselves in a debt trap, the four-letter word can easily become a burden on their shoulders! Lack of proper financial planning backed with a bad credit score can squeeze you into tight spaces where you would be struggling to find a way out.
Whether one is looking to repay their loans for bad credit no guarantor or their home loan, there are many ways to pay off your debt. Before we get into that, it is best to keep in mind that having debt repayment plans or rather strategies at the place is the way of the wise.
So, are you ready for the strategies that promote quick repayment of the loan? Be sure to read the following sections diligently then!
Table of Contents
It is best to repay the high-interest loans at first
The first strategy is simple – prioritizing loans as per their interest rates and repayment deadlines. This is helpful for those who have more than one loan to repay. All you need to do is formulate a list of all the loans that you have applied for and start repaying the ones that have high-interest rates.
This is a great way to cut the debt burden on your shoulders
Furthermore, always make sure that you are repaying the maximum amount at a single go. The faster you repay your debt, the better your chances are to keep your credit score unaffected!
Windfall gains should be used to clear your debt
Whether you are a salaried individual or the owner of a company, when you receive a fat check in the form of a bonus from your employer or when a bill is finally cleared by your client, don’t go on a spending spree. You might be tempted to buy that Smartphone you always wanted or that Hi-Fi stereo but you can do all that after you clear off your debt as well right!?
Situations like these are technically termed as windfall gains. Money one receives in a windfall gain should be used to repay debts. You can also use the money you get from your tax returns, life insurance maturity proceeds and likes to bring down your debt and that too pretty quickly.
You can always liquefy your investments and clear your debts
You make investments to secure your future right? So, when you finally find yourself in a debt trap, one of the best possible ways to come out of it is to liquefy some of your existing investments.
You can sell off some of that gold that you have been hoarding for some time. If that is not something you would want to do, why not channel some of your side income for a change.
Suppose you have some properties that you have rented out, why not channel the money you get out of those properties in the form of rent and pay off your lenders!? Get the idea!?
It is best to conclude a financial blog post like this one with a few words of friendly advice – never shy away from asking for help. Often the debt trap can be so burdening that one might even turn a blind eye towards a solution that is in front of them! To come out of such trying situations, it is best that you get in touch with the debt counselling centre of your lending institution. Here, officials will actively look into your case and tell you the best debt repayment ways.