Money Expert Strategies and Tips Trending When Payday loans online make Financial The Right Decision White & Case advises Castik Capital on the debt financing of the acquisition of ARTUS Beteiligungs GmbH and Artus Holding GmbH How to Use a Personal Loan to Pay Off Debt CHAR Technologies Announces $625,000 Debt Financing Netradyne secures $65 million in debt financing What is debt consolidation and how does it work? Advice from the Better Business Bureau: Beware of debt consolidation offers Moneyflow secures €250m debt financing Wayflyer secures $253 million in debt financing Navigate Home Debt consolidation Debt financing Pay off debt Debt issues Debt ratio Money Expert Strategies and Tips 0 By Hugh S. Turner on August 16, 2022 Pay off debt Debt. Even reading this word can make some of our stomachs turn, as it reminds us of ours and how long it will take to pay for it. If this is your case, know that you are in good company. “We can often carry a lot of guilt, shame, or anxiety around debt, which can leave us powerless to change,” says Natasha Janssens, finance expert and founder of Women With Cents. “The starting point is learning to forgive yourself and let go of past mistakes, so you can change your story from ‘I will never have money’ to ‘I learned from past experiences and I learn how to make smarter financial decisions.” Besides eliminating that feeling of fear, what else does becoming debt-free offer? Janssens says it can be an exciting and challenging time. Related: 6 money-saving tricks that won’t ruin your social (or general) life Related: Lifestyle creep could kill your savings, so how can you avoid it? “You may feel like you’ve unleashed yourself and finally be able to save and grow your wealth,” she says. “It can also be a lot easier now because you’re used to not having that amount in your bank account – the money used for loan repayment – and now you can use it for your next goal without having to make other sacrifices.” So what are some practical steps you can take to become debt free? Janssens offers three of them below. Use (part of) your savings to pay it back If you don’t have any savings, it’s time to think outside the box to find quick ways to accumulate them, says Janssens. Ideas she suggests include selling items you no longer use, registering your car for carpooling, and working extra shifts. “We’re blessed to live in the age of the gig economy, so once you think about it, rest assured there are plenty of opportunities out there to help you get some extra money,” says Janssens. . If you have spare savings you can use to pay off your debt, do it — and fast. “However, you need to be aware that you’re not putting yourself in a situation where you’re going into debt again because of an unexpected bill or life event,” she says. “For this reason, it’s worth setting aside an amount for emergency savings — it can range from $2,000 to a month’s living expenses, depending on your situation.” Janssens suggests keeping the decided amount — ideally, she says, a minimum of $2,000, which can cover any unexpected bills — on hand, and then using the rest of your savings to pay off your debt. Another tip? Reduce your credit limit as you go, to avoid temptation. Decide on a repayment strategy Note that deleveraging usually doesn’t happen overnight, it can take a bit of time. For this reason, Janssens suggests having a repayment plan in place. “Having a strategy in mind for how you’re going to pay off debt will keep you motivated and help you track your progress along the way,” she says. A popular method suggested by Janssens is the snowball method, which allows you to focus on paying off the debt with the smaller balance before directing repayments to the next debt. “Others prefer to focus on the debt with the highest interest rate,” says Janssens. “Depending on your credit score and borrowing capacity, you can also consolidate your debt into a personal loan – that way you only have one payment to make and you know exactly when you won’t be. more in debt.” Another option suggested by Janssens is to use balance transfer cards. This means you pay a lower interest rate or no interest on the debt you transfer to another card. “There’s little to keep in mind with balance transfers, though,” Janssens says. “You can’t use it for personal loans – only credit card debt. And even if there is no interest rate, different charges may apply, such as transfer fees. You also want to make sure you close your other credit cards as part of the transfer process, otherwise you can easily double your debt. Set incoming funds aside immediately Finally, to pay off your debts faster, you will need to be strategic with incoming funds. “We’re wired to spend what we see,” says Janssens. “The easiest way to avoid temptation is to pay yourself first,” she explains. “That means you automatically set aside your savings every time you get paid. Decide how much you want to save with each paycheck and automatically transfer that money to another account, so you won’t be tempted to spend it. Don’t fall into the trap of trying to save what’s left over at the end of the pay cycle — it never works, says Janssens. You can automate your payment first or even have your employer split your salary into separate accounts. Not seeing the money there will prevent you from spending it. Remember, there is no better way to budget. Make things as simple as possible and stick to a system that works for you, Janssens says. “I’m a big fan of bill smoothing, which is paying all my bills by direct debit every paycheck,” she says. “This way my bills are automated, my savings are automated, and I now easily know how much money I have left to spend on everything else. No complex spreadsheets required. Read more stories from The latch and subscribe to our E-mail. Related posts: How to pay off debt when you’re on fixed income Should you pay off your debts or save for your retirement? Pay down debt smarter by Bright Capital Inc Should You Refinance Your Mortgage To Pay Off Your Debt? Share. 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