7 Ways to Pay Off Debt Effectively and Carefully

 With financial conditions that are increasingly uncertain during a pandemic like this, you inevitably need to re-evaluate how to pay off the debt for the bills you currently have. 

Finding an effective and appropriate way to pay off debt can provide relief from the financial burden you need to deal with while managing your money well during a pandemic.

Accuracy is an important thing that you need to invest as a way to pay off debt effectively. The reason is, you need careful calculations so you can find ways to pay off debts well without having to sacrifice your daily needs. 

7 Ways to Pay Off Debt Effectively and Carefully
 7 Ways to Pay Off Debt Effectively and Carefully. photo by pixels.com/Mikhail Nilov

In general, it would be very reasonable if you have a debt burden of no more than 30 percent of your income. But there are times when you feel you can afford to have debt above that percentage. 

This confidence can sometimes bring results as expected, but not infrequently it also brings you down with a debt burden beyond your financial capacity.

How to pay off debt effectively

If you are already stuck in a situation where the debt burden begins to interfere with financial allocations for daily needs, then you must seriously find ways to pay off debt effectively and wisely. For that, you can try to follow some recommendations on how to pay off debt that you can do to restore financial stability.

1. Make a debt recapitulation

In trying to pay off debt effectively, you need to make a detailed list or recapitulation of your debt first. This method of paying off debt is an important step to take so that you can find the best scheme to bring back financial stability by paying off debt. 

Make a list of debts, starting from house installments, vehicle installments, credit card installments, and other loan installments that you currently have. 

Provide detailed information regarding the total amount and monthly installments. Then calculate it with the income you have. This method of paying off debt can help you plan or choose which debt burden is the main priority to pay off so that your financial condition is stable again and you can live more comfortable days.

2. Strengthen your will and determination

After you finish making a list of debts you have, the next way to pay off debt is to take a break while strengthening your intentions and determination. 

Maybe after knowing the total debt load you currently have, you might feel anxious and afraid that you won't be able to pay off all the bills you have on time. For that, you must calm down and rest for a while. 

Use this break to think clearly while cultivating strong will and determination. The reason is, this intention and determination is needed so that you are able to be disciplined in carrying out your responsibilities to pay off the debt you currently have. 

Also make sure you think about the consequences that might interfere with the allocation of funds for daily needs in order to carry out how to pay off your debt effectively.

3. Start paying with priority scale

When you are sure that you have a strong intention and understand the consequences of this effective way of paying off debt, immediately start paying off debt slowly. 

Based on the debt records that you make, you will find which debt burdens are included in the priority list. You can set the priority scale of the tenor calculation and the total amount of debt you have. 

Make sure to pay the maximum amount of debt that falls into the priority scale. As for debts that are outside the priority scale, that doesn't mean you don't pay them first. 

You need to keep paying off the priority debt with the minimum payment method. You can do this method of paying off debt if the priority debt has a large value load and has a short period of time, so that one by one your debts can be paid off effectively without the presence of other burdens.

4. Selling unused items

If you feel that your income is still insufficient to pay off your debts, you can sell unused items as an effective way to pay off debt. 

These unused items usually fall into the category of substitute goods or your everyday complementary goods. 

If you have 5 pairs of shoes, you can sell 2 pairs of shoes first to increase the cost of paying off your debt. 

In selling goods as a way to pay off debt, you can also maximize the role of social media or e-commerce services to help you promote the goods you want to sell so that they can sell in a short time. However, if you are worried about selling your items to strangers, you can offer them to your relatives or friends first.

5. Take over credit

Do you feel that vehicle installments are one of the debt burdens that make it difficult for you to pay off debt, even after undergoing various ways to pay off debt effectively? Maybe you can do a credit take over. 

Take over credit is one way to pay off debt that is quite effective. You can resell your vehicle that still has installments to be continued to the vehicle buyer later. In addition, you will also have the possibility to get additional fresh funds as a solution to how to pay off debt effectively.

6. Looking for extra income

Looking for additional income is also one way to pay off debt that is effective for you to do so that you can immediately settle the debt burden you have. 

By having additional income, you will be more flexible in managing your finances to share in paying off debts and your daily needs. If your debt has been paid off and you are still in this additional profession, you can also allocate these funds as additional savings or emergency funds to be used in your future.

7. Don't go back in debt

In carrying out an effective way of paying off debt, it is highly recommended that you pay off debt by returning to debt. 

It would be better if you settle all the debt burden you have until it is paid off. So that you no longer experience difficulties in paying off debt, it's good for you to change the lifestyle you have. 

Minimize the existence of debt for essential needs, such as ownership of a house or vehicle. For non-essential purposes such as vacations or gadget shopping, it would be better if you set up separate savings to fulfill these desires.

Carrying out this effective way of paying off debt will be difficult if you can't discipline your finances well. If you want to start having a stable financial condition and be able to manage finances well, start changing your lifestyle slowly and start saving.

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