Who knows the secret of how to get out of debt quickly or how to get out of debt on a low income? It’s not easy especially for a person who doesn’t have much money. When you ask this question to yourself “How to get out of debt quickly”, then you may get out of debt even if you are broke, but first, you need to make some financial changes.
Millennials are considered to be one of the most debt-burdened generations. According to a recent survey by NBC News/GenForward, almost three out of four millennials have a certain form of debt, either credit card or student loan. Other results of the Northwestern Mutual’s 2018 Planning and Progress Study reveal the fact. The average debt of millennials these days is $42,000, while just 22 percent of young people are debt free.
How to Get Out of Debt Quickly with Low Income?
As we all grow older, our expenses increase as well. For millennial’s, there are new financial burdens that previous generations didn’t have, such as student loans. Moreover, same day payday loans and bad credit installment loans are the most prevalent kinds of debt, with only 2 out of 10 young people having a home loan or a mortgage. If you are looking for the best way to get out of debt quickly, keep on reading.
Acknowledge the Problem
The first thing you need to do is to get a real picture of your debt and acknowledge that you have it. If you continue ignoring your student loan notices or credit card statements, it may lead to worse consequences. Collect all of your notices and statements together and make a full picture of how much you owe.
After that, go ahead and review your credit history. This can help you avoid common mistakes with your credit record as well as give you more understanding of how to create your “get out of debt plan”.
Get a free copy of your credit report to see the full picture and make sure all of your accounts are still legit. Getting some insight into what exactly is going on with your finances is the first step to your financial freedom.
Create a Deadline
Nobody wants to be paying off the debt for the next 10 or 20 years of their life. So, setting a target date can help you plan your regular payments and see how much is left. Create specific deadlines that are realistic and conservative.
You may use get out of debt calculator to figure out the exact amount of money it will take to repay the debt within this period of time. Divide this amount into small sums of money you will be able to pay off on a monthly basis.
How to Get Out of Debt with No Money and Bad Credit?
The next best option on how to get out of debt plan with no money and bad credit is to create a budget. It’s similar to going on a diet. Establish your monthly budget with your regular income and set expenses. Think about areas where you can cut back and where you cannot do it, such as rent, transportation, and groceries.
Don’t forget to set aside some money for fun. Your budget should be limited to a certain degree but not punishing. You are a human and deserve to have a little treat or watch a movie during the Christmas season. The majority of financial coaches advise setting 20%-25% of your monthly budget to repay the debt.
Negotiate with Creditors
You may not want to do this but negotiating with your creditors can really make a difference and show you how to get out of debt with no money.
Always try to pay all your important bills in time and in full. This includes utilities, insurance, mortgage or rent. In case you aren’t ready to make the minimum payment on your credit card, try negotiating with your card issuer and give them a call.
Again, if your credit history is fine and you haven’t had big problems with your loans before. You may be able to negotiate a lower minimum payment or even a lower interest rate. If you act wisely and explain your financial situation before they track you down for not making the payments. You will have less trouble and the creditors won’t need to send your account to collections.
Concentrate on One Debt at a Time
If you have multiple debts or loans to pay off, don’t try to repay them all equally. It’s better to start with the biggest kind of debt and work towards paying it off in full.
Once you succeed in solving the biggest problem, other loans or debts will seem easier to deal with. Focusing on one debt at a time gives you the motivation to move ahead while noticing visible results of becoming debt-free.
Face your debt now, choose the most suitable solutions and prepare yourself to get out of debt fast. Achieve your financial Zen and become more mindful about money for the future.
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