Many people feel that it is not possible to get out of debt by not earning enough to pay it off. The task is challenging, but with planning and determination, you will be able to accomplish it without any major problems. For this, it is important to recognize your situation, take action and organize yourself financially so as not to go through this squeeze again. See in today’s post how to get out of debt earning little:
Set the total amount of your debts
The first step in getting out of debt is to know exactly how much you owe and to whom you owe. The process is hard, but necessary: list all your debts, your values (including interest) and the respective creditors. With the total in hand, it will be easier to define how much you have to save per month to pay off your debts and regularize your situation.
Create a monthly savings goal
There is no way: to pay off your debts, you will have to cut expenses and save. With the total amount of what you owe, create a monthly savings target for that purpose. The ideal is to set aside 15% of your net income to pay off debts.
In more serious cases, it is necessary to tighten the belt further and allocate an even greater amount to be able to pay the debts and return to having the current account in green.
Try to renegotiate debt
Keep in mind that, just as you want to pay, your lender wants to receive it. Therefore, debt renegotiation is interesting for both parties. Before contacting financial institutions, stores and the like, it is important to prepare yourself to arrive at the conversation with a proposal. See how much you can afford and don’t exceed that amount.
Exchange your debt for a better one
Credit card and overdraft debts charge the highest interest rates on the market. In order to balance your finances, it is prudent to even exchange debt with higher interest rates like these for others that offer more competitive rates, such as payroll or personal loans. Even in the medium term, this exchange will make all the difference in your budget.
Control your spending
Controlling spending is an important step in order to heal your finances and effectively be able to pay off your debts. See where your biggest expenses are and where you can cut. Start with superfluous expenses, such as leisure, restaurants and personal care. Consumer bills, such as electricity, gas and telephone, can also be reduced with some changes in habits. Good Lenders can help you – in just 2 minutes you see where you are spending. Download now and see your situation: iOS and Android.
Create an emergency fund
Having an emergency reserve is essential to avoid having to take out loans in the event of an unexpected situation, such as the loss of a job or an illness in the family. With debts under control, it’s time to think about setting up a fund to be able to appeal if you have any unforeseen financial expenses. Ideally, this reserve should correspond to a value of three to six net wages.
Getting out of debt with little gain is possible! To achieve this goal, it is important to stay focused, manage your spending wisely and change your habits.
Do you still have any questions about how to pay your debts even if you earn little? Leave it here in the comments!