During difficult times like the global Coronavirus COVID-19 pandemic, where many of us are experiencing salary cuts or being laid off completely, don’t be tempted by unnecessary items and then add to debt – because often many people start paying in installments without taking into account their abilities. Some people keep buying things recklessly so that in the end there is a problem in installments. While still young and productive, free yourself from debt, be it credit card debt, online shopping debt, or loan installments. You may also read more finance tips on Google to know more ways to improve your financial condition.
Here are some quick and precise ways to get out of debt:
Learn spending patterns
Collect all bank accounts and credit card statements and check expense mutations. Mark the entry and exit items that are regular and mandatory. Regular income such as basic salary and income from other sources such as investment returns. Regular expenses for example the cost of renting a house or mortgage installments, paying for electricity, insurance, and living, and transportation costs. Then, separate the total regular expenses with expenses that are one-time only, such as the cost of eating at a restaurant, shopping for clothes, or other entertainment.
Make a list of debts and the amount
Make a list of debts and the number of remaining payments, including online loan debt, loans to friends or relatives, credit card debt, car/motorcycle/mortgage, or other installments. For each debt, write down how much you have to pay each month including interest and late fees. This will provide clarity on how much money must be spent on debt payments.
If you already know the list of debts and the number of monthly payments, compare them with your regular monthly income, and let’s start to make a strategy on how to get out of debt quickly and precisely.
Prioritize
The main priority to be paid every month is the monthly fixed expenses item as detailed in the first tip. After the salary and cash receipts are deducted from all these fixed expenses that are the main priority, set aside money to pay off debt. Sort debt by priority, prioritizing the one with the highest interest to settle first.
