Debts are always daunting, even more, when economic uncertainties prevail as in current times. Most people accumulated debts amid the pandemic because money was tight due to pay cuts and job losses. The biggest concern right now is paying them off, and it should be your priority when it comes to fixing your finances. After all, loans and borrowings come for a price, and interests can burn a hole in your wallet. You may actually end up in the worst place money-wise. It makes sense to clear your debts at the earliest, although it sounds challenging as money crunch still prevails in the new normal. Here are some creative ways to do it.
Pick an apt repayment plan
The best way to handle debt is to repay it, but it is often easier said than done. However, you can explore the apt approach depending on your current financial position. Consider the pros and cons of snowball and avalanche to decide the one that works for you. With the snowball method, you start by clearing the smallest borrowing and work your way up to the largest. It is ideal if you have only a small amount of outstanding debt. The avalanche method picks the ones with the highest interest rates first. The approach is suitable if you owe a massive sum with high-interest rates.
Consider debt consolidation
If you have massive credit card dues, things can get out of control before you know. Credit cards allow you to purchase today and repay in the future, but people often go overboard with them. You may end up with huge costs if you fail to repay on time, and debts pile faster than you imagine. The best thing to do in the new normal is to clear your dues. Consider taking a loan to pay off debt on your credit cards in full. The consolidation strategy shifts the burden to a single loan, making it more manageable than keeping track of multiple debts. You may even get a loan at a lower interest rate, which reduces your monthly burden and gets you on the financial recovery track again.
Find ways to make more money
This one is a no-brainer because earning more money lets you clear your debts faster. Thankfully, there are plenty of good opportunities to pocket extra cash in the new normal. The gig economy continues to be a trend beyond the pandemic, so you can find a side hustle that matches your skill. If you already have a freelancing project or two in hand, invest extra effort to find more. You can try your hand at an online hustle or even pick a weekend job with a local store. Utilize the additional earnings to create a realistic repayment plan for your existing debts. Stick to a budget and avoid spending the extra dollars anywhere else.
Besides clearing your debts, you must commit to a minimalistic lifestyle in the new normal. Save and repay, and make sure you do not borrow more. Your debts will disappear faster than you imagine.