Debt can be a big hindrance in reaching your financial goals this year. It can wreak havoc in your personal life too, as you can be miserable when you struggle to make debt repayments. Getting out of debt is not that easy. You might have to use all your income every month and nothing will be left for an emergency fund. Becoming debt-free needs commitment, discipline, and motivation. Luckily, there are many ways to get out of debt and still build a nest egg for a rainy day. We have prepared a Pag-IBIG loan guide so as not to sit in a puddle of agreement. Read it too, very carefully
No more debts for now
Debt is not always a bad thing. The determining factor is how, when, or where you use it. One good thing is if you borrow money to finance investments, that can result in higher balances than investments that come entirely from cash. But when debt becomes a burden, then it is time to stop piling up your debt. This means no more asking for loans in the meantime until you have wiped out your slate clean. This gives you the chance to start all over again.
Try freezing all your non-essential spending for three months. If you have a problem with credit cards then cut them up or put them away. One way to avoid paying with your credit card is not to bring it with you every time you go out of the house. Just bring cash good enough to buy your essentials. When you pay in cash, you are physically aware of what you have to give out, thus it serves as a deterrent to spending unnecessarily.
List all your debts
Make a catalog. Go over all your receipts, statements of account, and bills. This may be an arduous job to do but you have to have a clear picture of your debt position. Many people are uncomfortable with their debt issues, but you need to face up and deal with it no matter how difficult it may seem. Once the complete listing is over, you can now embark on debt payment strategies.
Classify your payables into needs, wants, and debt repayments. Write down your monthly bills such as rent, telephone, other utilities, and debt payments. This is the time to stop buying luxuries and indulging in vices. Sacrifice is the key, so monies for wants will be freed up for debt repayments. Always set aside for your savings no matter how small it is.
Four methods for your debt repayment
There is no one strategy when you want to pay your debt. There are several methods of debt repayment.
1. Researchers for the Harvard Business Review found that the snowball method proved to be the most effective strategy. This method prioritizes your smallest debt first, regardless of the interest rate. Try listing all of your debts from the smallest to the largest, then pay the minimum balance on each debt, except the smallest debt. For the smallest one, try to pay as much cash as possible each month until it is fully repaid then move on to the second smallest debt. The idea here is to see your debts disappear one at a time. Focusing on paying the account with the smallest balance will give you a sense of progress. It will give you a push or energy, therefore, encouraging you to continue paying until you reach your goal.
2. There are other methods too if you want to look at them. The debt snowflake method is making one-time payments whenever you can, so whatever amount you put toward your debt will eventually accumulate in time.
3. In the snow shovel method, you look for other sources of income if you cannot pay the minimum amount payable for your loan.
4. The debt avalanche method is done by getting rid of your debt by paying the one with the highest interest rates first. Thus, you pay your minimum monthly payments on all your debts but pay extra toward the debt with the highest interest until it is gone.
After you decide on which method to use, start paying your debt now. Keep it up until you are debt-free. But if you need emergency cash now, go to Robocash website. Robocash can help you with your financial needs provided that you are a Filipino citizen, 21 to 70 years of age, and employed or in a certain profession. All you have to do is register and provide a valid government ID and a mobile number that is not blocked.