While most are living with it and managing the debt well by continuously paying off the loans and credit card bills, there are a few who end up borrowing more than what they need at times or more than they can afford to repay at other times. The consequence is that they have to live under constant fear, trepidation and guilt.
With low credit scores, they get identified as bad credit elements and soon many financial companies start rejecting their loan applications and credit card companies stop issuing them new cards. The situation turns from bad to worse and if they can’t pay off the loans quickly, eventually they may have to declare themselves bankrupt.
The problem gets compounded if an unforeseen tragedy hits suddenly. You may lose a job or face a health issue for which you were not prepared. This is over and above the loan crisis that you were already facing. That is why, it is important not to let the debt to assume a gigantic size and proportion.
Some strategies that can help you to quickly get out of loan debt
Although paying off all your debt and becoming debt-free requires a Herculean effort and despite many sacrifices, you may still need decades to become complete free from debts, the following are some practices that can help you to reduce your debt steadily and quickly without making too many sacrifices on the other life fronts.
- Think of slashing your monthly expenses and having a lean budget: The first thing that is probably needed to come out of a loan mess is money management. Money management, however, cannot be started until and unless you learn to really take off the excess flab from the monthly budget and keeping it minimalist. You will have to let go of all the extras- the so-called “luxuries” of life like going out to eat frequently, buying an expensive party dress, buying expensive pairs of shoes and colognes every now and then, etc. Check yourself from making impulse buys. People can live without them and you will also have to learn to adjust.
- Loan consolidation: If you have numerous loans and debt to worry about, you can take one single loan that would pay off all the other loans. The benefit is that you will have to preoccupy yourself with a single loan rather than multiple loans. Interest and fees go down substantially which can save you a lot of money. A Canadian company called Cashco Financial has a great product called a Flex Loan that is easy to qualify for and is able to consolidate debt and rebuild credit for you. See if they can help you at www.cashcofinancial.com
- Pay more than the minimum amount due: If possible, try to pay more than the minimum amount due on your credit card or if it’s a personal loan like a flex loan or a short-term loan like a payday loan, try to pay more than you are required to in one installment. That way, you would be able to save a lot in terms of interest and you will also pay off the credit or loan balance quicker. However, a lot of loans have hidden clauses under which the lender will charge a pre-payment penalty if you pay off the debt before the agreed upon time horizon.
- Control the temptations: It is hard for a lot of people to stay away from their passions or temptations, howsoever expensive, even under the greatest financial duress. Change this habit if you have it too. You will have to give up all your expensive habits and try to rein in on the expenses as much as possible. Give yourself small gifts for being able to hold off your temptations. It would prevent the grim financial situation from worsening further.
- Debt settlement: If after all considerations, you come to the conclusion that it is utterly impossible for you to pay the loan debts, try to work out a debt settlement plan with your lender. It should be the last option on your list of strategies. Under this, you will agree to pay the lender a small amount if they let go of the debt. However, the downside is that it would hit your credit scores badly and would appear on all your future credit reports. You should read the fine prints of any arrangement carefully. Take legal help if you are not confident. There are also debt settlement companies who work on behalf of their clients but it could be an expensive option.
Coming out of your loan debts completely is not easy as said at the beginning. However, planning, sheer grit and a little luck can help you to overcome this problem. Just deal with it and you will eventually win.