Are you struggling with reducing your consumer debt quickly?
Let’s face it, it’s undeniable that the economy isn’t as buoyant as it used to be, and no wonder many people today are getting deeper and deeper into debt rather than getting out of it. The bitter truth is, in most cases, you’re not to blame for the debt. After all, basic needs like shelter, food, and clothes are inevitable expenses you just have to make.
And because of their justifiable nature, you never thought the need to keep a tab on them and control your spending on them. Unfortunately, before you knew it the circumstances had gone beyond your control and you’re now left owing more money than you can pay off.
And finally, you’re totally confused and left with no idea of what to do.
I think I’ve your back: consumer debt reduction may just be the right solution you’ve been looking for.
But in case you’re wondering what consumer debt is, here’s a brief definition of the term:
Definition of Consumer Debt
Consumer debt simply refers to those debts owed by consumers as a result of their purchase of consumable and/or non-appreciable goods. So, any expenses or debts incurred by consumers on goods that are meant for their consumption and not for an investment purpose is regarded as consumer debt.
And such goods are referred to as consumer goods. Examples of consumer goods are clothing, food, and jewelry.
What Steps Are Most Effective for Reducing Consumer Debt?
Of course, there are diverse ways to reduce your debt quickly. Whichever you opt for will depend greatly on your personality and current circumstance.
Here are 4 steps to reduce your consumer debt quickly:
1. Define your present financial position.
Knowing exactly your current financial status is the first step you need to take to reduce your debt and get yourself off to a good beginning. Here you need to begin by jotting down all your household expenses, interest rates, debts, and any other expenses you incur on regularly.
While you’re at it, you need to let accuracy and specificity be your watchword: don’t try to overlook or underestimate any expense. Also, don’t forget to write down all of your income, including all your liquid assets that you have and which you may want to apply for lowering your debt.
2. Set clear priorities for yourself.
Without a doubt, fundamental needs like food, shelter, and water are your highest priorities. Utilities and medication will most certainly be near the top of the list for most people. Following these, you may want to add a vehicle, depending on the state of transportation in your country, or if you must have a car to get to work.
I know you’re wondering already if you’ve to give up everything (including those little “treats” you use to have in your life all in the name of reducing a damn debt).
Not at all, but you need to start by giving priority to those necessities first. And then you can start by deciding what follows next in your hierarchy of needs. Because to succeed with reducing your consumer debt, it makes sense that you leave out those less necessary items first.
For example, can you do away with the full satellite television package, and live with basic TV for the next few months (if that’s all it takes to get out of debt)?
If you’re not sure how to prioritize your needs, I recommend you read Maslow’s Hierarchy of Needs here. It will help understand the five-tier model of human needs and how you can grow from one lower level of the ladder to another higher one.
3. Reduce the amount you owe.
Of course, every penny you make chips away at your debt, and that can be very impressive for you, right?
Yes, you’re correct.
But that’s not the idea I want you to have here: I’m talking about getting rid of your debt all at once.
How do you do that?
By reaching out to each of your creditors, you may be able to convince them to forgive late fees, remove other arbitrary fines or lower interest rates. If this won’t work out, then it’s time for you to consider getting a debt consolidation loan which will help you improve your financial situation quickly.
4. Increase your payment.
I know this may sound obvious asking you to increase how much you pay. But the reason behind this is way important if you’re to think about it. It goes without saying that the more you can pay your creditor, the lesser your debt becomes and the quicker you’ll be able to pay it off.
Another benefit of paying much is that it helps in negating the effect of compound interest. While you may want to consider factors such as the amount you owe and the current interest rate, increasing your minimum payment by double, for example, could mean you’d be able to pay off your debt eight times faster!
Consumer goods are one of the items that can easily gulp your money and lead you straight into irrecoverable debt especially if you’re the type who spend on impulse. While many times it may not be easy for you to get out of your debt, knowing when and how to prioritize your needs will help you out in no small ways.
Although there are many steps to reduce your consumer debt quickly, the above steps are my proven and effective ways to not only get out of your debt but also improve your current financial situation.
How about you?
What tips work for you for reducing your consumer debt?
Kindly let me know what your experience is!
Thanks for reading?