Having a debt is a natural thing. However, when the debt is left just like that so that makes the existing interest even greater, this is the right time to find a way to pay off debts.
If you are among those who are in debt and plan to pay it off immediately, the following method will be very suitable for you!
How to pay off debt properly and correctly
To meet daily needs and start a business, not a few people who choose to owe and wash them gradually so that the financial flow becomes smoother.
However, there are also some people who when they have a debt, want to pay it off directly or do not want to be bound by debt for a long time period. If you are one of them, here is how to pay off debts that are good and correct.
1. Reset the expenditure post
Resetting the expenditure post can help you set aside more budget funds to pay off existing debts.
Routinely do monitoring and evaluation of financial cash that comes in and out. If there are expenditure funds that are considered not important and cause waste, then the expenditure can be trimmed and diverted to pay debts.
Separate between needs and desire. You can also start a frugal life or frugal living from now on. This will bring a huge impact on your expenditure post.
2. Recapitulation of debt
Making details or recapitulation of all debts owned can be a way to pay off the next debt.
Recapitulation must be accompanied by the remaining debt, interest rates, debt term, and priority of debt to be paid off. This can help you in paying off debts well by setting priority scale related to debt which first should be paid off.
3. Use savings
If you have more savings or emergency funds, you can use the savings that are owned with a note of not using the overall savings money to pay off debts.
When you use all savings for debt, then you will have difficulty getting additional funds and potentially having a debt back during an emergency.
4. Take Over Credit
How to pay off this one debt is quite practical but very risky. Because, by taking over credit means you agree that the assets guaranteed are sold to pay off the remaining debts.
5. Selling assets owned
If the take over loan option is felt to be too burdening you or has not even been able to cover the nominal debt you have, the way to pay off other debts is to sell the assets you have.
There are many valuable assets that are quite easy to sell such as gold, diamonds, motor vehicles, land, houses, and so forth.
6. Pay off the debt with the biggest interest
Interest contained in debt is indeed quite burdensome especially for debt owners. Because the amount of interest will have an impact on the financial cash flow that you have.
However, if you are determined to immediately pay off the debts you have, you should be hastened to pay off debts with the largest interest first. This will make the burden you are lighter.
7. Preloved Items that are not used
In addition to selling assets you have, you can also sell unused items as a way to pay off debts. The term most often used for this activity is preloved.
For example you can open a special thrift shop shop that you have used before. For example cooking utensils, use, decoration or ornaments of the house, and many more. Make sure these items are still in good condition and suitable for use.
To make it easier for these items to sell quickly, you can offer them online like posting them on social media or marketplaces
8. Avoid the bad habits of digging hole cover hole
Many people assume if the debt can be easily paid if we close it by borrowing other funds. This practice is called the hole cover hole.
Although it is effective, in fact this is a way to pay off the wrong and fatal debt. Instead of the debt that is quickly completed, you have the potential to add new problems that in the end the debt you have is never completely paid.
9. Ask for professional help
If you feel confused to set the right strategy related to how to pay off debts, asking for help from professionals can be other options.
Most importantly, be sure to choose practitioners or institutions that have official legality, trusted, and monitored by the government.
10. Find additional income
Finding additional income is a wise way that you can try. Especially if you feel monthly income or assets that have been sold are not enough to pay off the debts you have.
To get additional income, you can offer expertise in the service sector. For example, being a private tutoring, consulting service, entrusted services (jastip), online motorcycle taxi, photographer, articles writer, and so forth.
Not only that, you can also start doing business with minimal capital such as being a reseller, dropshipper, or opening jastip.
11. Starting a business with thin capital
Not only selling services from the expertise you have, you can also get additional income by opening your own business as a way to pay off debt.
One of the right steps you can take to start a business is by applying for a loan in the form of productive debt.
What is a productive debt? Productive debt is a type of debt used to buy assets or goods whose value will increase in the future.
So, when the existing credit has been paid off, you can feel the benefits of the transaction in the future. For example business capital, education costs, and home ownership loans.
