Paying off debt by yourself can be intimidating, especially if debts are high and seem unconquerable. However, a few budgetary adjustments and a bit of foresight can make conquering debts easy and affordable.
Firstly, if possible, consumers should always pay more than is required. Try and pay up to 10% extra on your monthly payments. Doing so will not only pay off the debt sooner, but also reduce interest and ensure that you have a sparkling credit record. The added 10% can also guard against unforeseen spikes in interest rates – already paying more than in required means your budget won’t break when the payment increases.
A second option is to consider debt consolidation. By taking out a loan to pay off existing debts and only paying off the loan in longer terms, a consumer can free up more disposable income. Some creditors are willing to reduce the settlement amount if a consumers offers to settle the debt immediately, thus it can also result in saving money.
Any extra money should go toward settling debts, therefore use a considerable amount of bonuses or other extra incomes to settle debts. It may seem futile to spend all that money on debt and not see anything in return for it; however the money will come back to in terms of savings in the long run.
The golden rule of paying debt by yourself is to pay timeously. Late payments can result in penalties and added interest. Therefore prioritise your debts and make the time to pay them before the due date. This will also ensure a healthy credit record, as late payments are recorded by the credit bureaux.
Debt does take time to pay off by yourself, but the satisfaction gained from knowing that you did it on your own far outweighs the minor sacrifices required to do so.
Article written by: Andrea van Tonder 06-2013