How to Pay Off Debts Quickly With Little Income

Debt is a problem that can limit our lives by keeping us in a state of constant stress.

Therefore, finding a solution to them and leaving them behind forever is a necessity, not only to be able to enjoy our money but also to have better health.

In this article, we will give you some excellent tips that will help you get out of them once and for all. Pay attention!

Is debt always a bad thing?

Before moving on to advice, it is necessary to understand in which cases it is worth getting into debt and in which it is not.

A person should incur a debt only when the money they are going to acquire will be used to generate profits in the future –You know, when you want to carry out an investment project that will give you income above the interest rate plus annual inflation and such.

On the other hand, when it comes to consumption, it is advisable not to contract debts.

Surely you may not be very satisfied with this advice but that is the reality, the best thing is not to owe money and only buy things until you have enough capital to do so.

Now, if you still want to contract consumer debt, it is recommended that you always acquire short-term debt (the longer the interest can be higher), with a payment that does not exceed 10% of your income and you must have the assurance that you will continue to receive your current income in the time that the credit lasted.

Don’t be guided by your emotions! You must see the reality, analyze your options and choose what suits you best.

I want to take out a loan How do I choose the best option?

Financial institutions will always tell you that they are the best option even if they are not, no matter which one you visit they will all try to “sweeten” your ear and convince you that they offer you packages at the lowest cost on the market.

However, this is not always true and it is best to compare all available options, to do so check out the following tips:

Interest rate:

  • The interest rate and the annual percentage rate you are charged is fundamental. In the first case, you should choose a fixed rate, this will prevent your payments from varying if there is an economic imbalance in your country.
  • On the percentage side, get your credit from the financial institution that offers you the lowest.

Extra payments:

  • Some loans contract insurance, require payment of annuities, among other things that raise the cost of debt.
  • Therefore, always ask them to show you everything that will be included.

No penalties:

  • Look for credits that allow you to make direct payments to the prime without any penalty, this you will do in order to end the debt in the shortest time possible.
  • In addition, ask how much time must elapse before you can make these contributions.
  • Doing this will reduce the interest you will pay and will allow you to noticeably reduce the time you will be in debt.

No guarantees:

  • Choose loans that do not put your assets at risk and that do not put the people you love in difficult situations.
  • Remember that it is a commitment and risking what you already have is not a good idea.

Look for banks:

  • We all have the idea that banks are the most abusive financial institutions that exist, but this is not true, it all depends on the financial product.
  • For example, a credit card is not recommended because it can charge interest of up to 80% per month; in contrast, mortgage credit can have an interest rate of 10%.
  • Obviously, this depends on the reference interest rate provided by the central bank, the bank you choose and the type of credit you want, but it is relatively low compared to the rest.

Moving forward, these 5 tips will be of great help to you when contracting a debt. Always take them into account and analyze the data provided by each bank, remember that you are the one who will pay, so do not be afraid to ask.

How to pay off debts quickly with little income

We are about to get to the most interesting part of our article, how to pay off debts quickly with little income.

The first thing I must make clear to you is that this will not be a magic formula that you will put into practice and ready, everything will be resolved without making sacrifices.

Remember that this is a serious blog that will provide you with real solutions, not miraculous ones. If you’re ready to make changes in your life and improve your financial and physical health (because stress kills so it’s best to leave it out) pay close attention to the following:

Put your feet on the ground: We can’t start with better advice, if you’ve gotten into debt to the point where your income is less than your monthly payments, it’s because your feet aren’t on the ground. You must live the life you can afford, it sounds hard but that’s the reality.

Don’t buy an expensive car if you can’t afford it, don’t remodel your house if you can’t. You have to analyze each financial decision taking into account your income and your possibilities. Get your feet on the ground now!

1. Eliminate unnecessary expenses:

Do you buy a soda at every meal? Do you love to eat meat? Do you go to the movies every week?

Then you must stop, not only for your physical health (soda and meat are very bad for the body) but also for your financial and mental health, as these products represent expenses ant that gradually empties your pocket.

Then, what you should do is sit at your table and look for all the unnecessary expenses you are doing and suppress them, at least until you are no longer in debt.

2. Get rid of what you don’t need:

Analyze your life, do you really need such an expensive car? Is it essential for you to use your credit card all the time? Can’t you wait six more months to buy that device you love so much?

Get rid of all the financial products you don’t need, cancel your cards, buy cheaper items and only those that are necessary.

3. Focus your life to pay your debts:

Now that you have defined your consumption limits and put aside unnecessary expenses, you should focus on paying all the debts you have, the money you have leftover should be destined to extra payments so that your debts are gradually decreasing, but constantly.

4. Make a plan:

Hand in hand with the previous point, once you have focused on paying your debts, you should design a REAL plan, based on your income and expenses that allows you to know how much longer you will be in debt and what will be the amount of money you must earn month by month to get out of the problem in the time you have previously established.

The closer to reality your plan is, the greater the chances of success, so do it as accurately as possible.

Besides, any extra income that you get to have should focus on your debts, even if the plan does not include them.

5. Seek to refinance your debts elsewhere:

There are a lot of financial institutions (check your country’s government pages to find all those that are regulated) where you can apply for loans. Surely if you look closely you will find some that offer you credits at a lower cost compared to those you are currently paying.

At this point, it is recommended that you make a table and compare until you find the best option for you.

6. Don’t fall for deceptive advertising:

On the internet, there are a lot of ads that offer you money without working or sell you the idea that they will refinance your debts.

Don’t be fooled! The world is a cold place and no one will help you if you don’t get something in return. If you fall into one of these scams you will not only increase the size of your debt, but you could also incur more serious crimes.

7. Work harder if you need to:

Obviously, if your income is not enough to cover your household expenses, you should look for other options to increase your earnings.

We know that you already have a job and that this job will probably take up a lot of your time, but if you want to get ahead you will have to sacrifice and spend more time of your life to get more income.

At first, may seem complicated but if you look, you will find many options to increase your income, even some can be from the comfort of your home.

BONUS. Get out of your comfort zone:

In addition to the above, it is necessary that you take risks and change your lifestyle, so come out and look for solutions outside the box, this will not only eliminate your debts but can also bring you many more benefits.

Finally, If you want to get out of the debt problem once and for all you must do it on your own, working more, being more responsible in your purchases, living a life according to your possibilities, eliminating the expenses you don’t need and taking into account that your income must be always above your expenses.

When you’re out of debt, you’ll be at the perfect time to start a savings account and allocate the part you paid in interest to savings, this will allow you to start designing a plan for your retirement.

Don’t give your money away! Start applying our advice to your daily life and you’ll notice how everything is changing. You have the tools to say goodbye to all debts!

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