Best Way To Get Out Of Debt

The debt problem sometimes does pose a heavy burden for some people. The heaviest burden of debt is not to pay it back and is no longer a financial problem, but rather a psychological problem. Therefore, to reduce the burden, there are several best ways to get out of debt.

Best ways to get out of debt (Picture: fool.com)

It is normal to have debts. However, if the existing debt is left alone it makes the existing interest even greater, of course, this will be troublesome for you in the future.

Best Way To Get Out Of The Debt

There are many ways to get out of the snare of debt that shackles your life. Here are 5 ways that can be done, to quickly pay off debt, including:

1. Don't Create New Debt

Don't make things worse, not adding debt doesn't speed you out of the debt trap. But if we don't pay attention to this, it will be much more difficult to make progress in paying off debt.

Train yourself not to create new debt, by freezing your credit card or cutting off your existing credit card.

2. Ways To Get Out Of The Debt Trap is to Build an Emergency Fund

An emergency fund is very important to have, especially if we are in debt. Because having an emergency fund can prevent us from creating more debt. Having an emergency fund can prevent us from using a credit card as an emergency fund if there are emergency costs that suddenly appear.

Ideally, we prepare an emergency fund of 6 to 12 times the cost of living. Even though there is little we have in an emergency fund it is better than relying on a credit card.

3. Negotiate Interest Rates To Creditors

Many people can't settle debts because of their payments, charged a monthly interest fee instead of their actual balance. But try to negotiate interest rates with your credit card issuer. Creditors will provide a policy by looking at the history of existing transactions.

If the payment during this time is smooth, the possibility of negotiations for obtaining a low-interest rate can be successful. Be wary of the interest rate promotions that lenders often offer.

If you get a lower rate, try to pay it off as soon as possible so that you can still get the low rate before the promotion ends. Because actually if the promo period ends, the credit card balance will be charged a higher interest.

4. Withdrawal of savings from a pension fund or insurance policy owned

If your debt situation is very bad, maybe you have considered paying off the debt by withdrawing your retirement money. But you have to understand that every retirement account has rules and will probably impose different sanctions if we withdraw them not in time.

If this is the case, you intend to pay your debt by taking a pension fund, then you should consider the penalty you will bear. If the way to pay the debt you take is to take your pension fund then there is another effect, namely that the retirement age may be longer and backward from the schedule that has been made.

There is another way to quickly escape the snare of debt, namely by taking from an insurance policy. There may be little cash value already formed. If we take the funds from your insurance policy fund, then the effect for you is that the benefits of the insurance itself are reduced. Or you cannot receive benefits by the terms of the policy.

So still your consideration is needed to take this step.

5. Consult Your Financial Planner

Debt problems often stress many people. Not a few people ultimately decide to pay for the services of a financial planner to help them get out of the debt trap immediately.

This gives us a clearer view of the financial problems at hand and a clearer way to achieve our financial goals. A financial planner there specializes in negotiations with your creditors.

Debt won't go away in an instant, but you might be able to pay off debt faster and have a lower interest rate. Another use of having a financial planner is, they will give directions as well as an alarm if there are new problems that we may not be aware of in terms of finances.

Hopefully, this information about the "best way to get out of debt" is useful and can be a reference for you.

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