Financial Planning

Tips to Help You Create a Successful Debt Repayment Plan

Debt is modern slavery. Being in debt cripples you and hampers your financial progress. To get ahead in life moneywise, it is essential to develop a plan to help you clear debts. I have been a victim of bad debt, and I know first hand what it can do to a person.

I managed to clear my debts by having a proper plan that ensured I could manage to pay my bills while still contributing to my debt reduction. In this post, I want to share some of the tips I employed to help me get rid of my debts. Whether you are in debt to the tune of millions, or it’s a small debt that you seem not to have the means to clear, these tips will give you a roadmap.

1. Identify All the Debts That You Owe

The first step towards healing is acceptance. When it comes to being in debt, you must identify and acknowledge all your obligations. Start by making a simple list that states who you owe and how much. Consider any accumulated interest that may affect the original debt and add this to the total amount you owe.

Once I identified who I owed and how much, I could fine-tune my debt repayment plan, knowing well what amount I was working towards. This move came in handy because in the event I needed some help, I could clearly point out to what extent.

2. Talk to Your Creditors

When you take the initiative to start repaying your debts, it is advisable to talk to each of your creditors. If possible, negotiate a lower interest rate on the loans that have accumulated interest. Keep in contact with your creditors as much as possible because let’s face it, you don’t want to get yourself into a situation where they have to employ debtor tracing services to find you. To prevent any and all such situations, maintain a positive relationship with your creditor at all times. Visit them in person, call or even email them and inform them of your intention to clear your debt within a given period.

My debt repayment plan took this direction, and I made a courtesy call to each of my creditors. At first, I feared that I would receive a hostile welcome, but to my surprise, most were willing to help me clear my debt. I was able to negotiate an extension on some of the debts. For two, I was even able to get a waiver on all the accumulated interest.

3. Make Partial Repayments

The easiest way to clear a debt that you have is to make partial repayments. Through this, you will reduce the debt balance and thus reduce the burden on you. Making partial repayments also shows your commitment to clearing the debt and improving your credit score.

After talking to my creditors and negotiating better terms, I dedicated a portion of my income towards my debt repayment. In instances where I could make lump sum payments, I went ahead and did that to help reduce the total debt. You may also want to consider making use of certain financial services to help relieve your debt woes. By using a SoFi credit card, you may find that its features enable you to pay down debt (amongst other benefits), but this could be the ideal addition to your overall repayment plan.

4. Freelance to Earn Extra Income

Debt repayment is sure to eat into your income. To ensure that you can clear your debt in time and remain on track with your payments, it is advisable to freelance. If you have a skill that you can offer to others in exchange for some money, list this on any freelance site. Use the income from this freelance gig to contribute towards your debt repayment.

Although I worked as a restaurant attendant, I was naturally gifted at painting. I listed my services on several freelance sites, and within two weeks, I was making wall hangings that I sold to earn extra money. This additional income helped me clear all my debts in half the estimated time.

Conclusion

Living a debt-free life is admirable; it is enjoyable, and most of all, it is achievable. Even when caught in the deepest debt rut, you can get out of it with a proper repayment plan using the tips above.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back To Top