For many people getting out of debt may seem like an impossible dream. However, if you’re determined and focused enough, you can turn your bad debt situation around into something that can help you generate and accumulate wealth.
All that you need to get out of a bad debt situation is sheer willpower and high motivation.
In this article, I am going to help you find out the best ways through which you can get out of your bad debt situation quickly.
Time Is The Essence, Shorten Your Repayment Time
The absolute first thing you need to do is always pay more than the minimum interest payment.
The minimum interest payment is a cleverly designed trap that makes people feel that they’re being responsible and paying back the loan in parts.
What the minimum repayment does is that it gives you a false sense of illusion, and also, at the same time, it helps bank owners and lenders take out the maximum amount of interest payment from you.
What you need to realize is that you need to pay off as much as you can and as fast as you can.
You’d be surprised by how much you could save in interest payments by just adding in a hundred dollars to your loan amount. The sooner you get rid of your loans, the better, having debt keeps you from building wealth.
Create a loan repayment spreadsheet
If you’re planning to get rid of all your loans and you’re planning to start getting rich, then it is high time that you start getting serious as well.
Create an excel spreadsheet that lists out and accounts for all the loans you’ve taken and all the upcoming repayments that are due.
You need to use the spreadsheet to its full potential, make proper loan repayment tables, calculate the interest payments, and include your budget and salary income. Use the worksheet to construct a stable and robust financial repayment plan and experiment with the amounts that you can save by paying a little extra each month.
Having a plan and allocating a budget to your loan repayment is the first step to becoming debt-free. The ways through which you can use and manipulate your spreadsheet are endless. You can even come up with a five-year robust plan to help you accumulate wealth.
Negotiate Your Interest Rates
If you have a credit card loan, the chances are that you can hike down your interest rate over a simple phone call!
Your credit card lenders can help you bring down your interest rate if you let them know that you are looking to pay off your outstanding amounts.
There are numerous blogs and articles online that talk about the ways through which you can bring down your interest repayment rates. You can also let your lenders know about rivals that are willing to offer the same loan to you at a much lower price.
Create A Gap Between Your Earnings And Spendings
Why do people often find themselves in debt?
Because they end up spending more than what they earn, and credit card companies love that.
What I want you to do is create a large gap between what you spend and what you earn. You will have to drastically cut down on your expenses and use the surplus amount to repay as much of the loan as you can.
Create a spending budget and don’t deviate or give in to impulse buying. That item that you want will end up costing you much more than its stated sale price.
Create A Wealth Accumulation Plan
Once you have your debts in order, the time has come to create a wealth accumulation plan.
If you’re serious about getting wealth, then you cannot slack off once you are debt-free. Sure, you can treat yourself for accomplishing your goals, but you will very soon need to get back in action once again.
Once you are debt-free, you will find that you now have much disposable income at hand. Now is the time to play smartly.
Look for the best assets that you can use to build your wealth. Invest in stocks, and gold, put your money in shares expected to rise and keep in touch with the overall market.
Your disposable cash is here to serve you, and you need to utilize it well enough so that you can get rich and build your wealth in a short time, and that too from nothing. Most hedgers and financial traders live by the saying, ” buy low and sell high.”
You need to make this saying your mantra, buy stocks when they are at a comparatively low price or when they are forecasted to rise and sell them when they reach their optimal level in the market.
Build A Wealth Snowball
Once you’re in the habit of saving up and not spending all you earn, you can keep your extra funds in a treasury bond and start accumulating profit from them. To get wealthy, you don’t need to work super hard; all you need to do is work super smart.
Put your extra money in different investments, invest in a savings plan and a retirement plan that can help you put away much money so that you can have a quiet retirement and don’t have to work well beyond your 50s.
It is also not a bad idea to start a part-time job in your free time. You can even take up a part-time job while trying to get rid of debt.
The more productive you are, the quicker you will be able to achieve your goals and move ahead in life. Part-time jobs can help you get extra cash that can help you with fulfilling all your short term and long term needs.
No matter how bad your debt situation is, you can get out of it if you are demonstrating strong willpower and also show a certain level of dedication towards your goals.
With the right debt repayment plans and the right wealth accumulation plans, you can accomplish just about anything, even with a limited budget.