The Malta Independent 5 December 2023, Tuesday
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How to pay your debts fast

Sunday, 24 September 2023, 08:41 Last update: about 3 months ago

Luca Caruana

In my role as a money coach, I am constantly asked about efficient methods that can speed up the process of paying off debt. It is not easy to find an answer to this question because the best strategy can vary depending on a number of circumstances, such as the following:

1.      The specifics and scope of your financial obligations;

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2.      Your current level of income; and

3.      Your typical ways of spending money.

Despite this, there are a number of general recommendations and strategies that, when implemented, can speed up the process of repaying debt and lead to cost savings.

Create a spending plan that is unique to you and keep track of your money: Creating a spending plan that is specific to your situation and keeping careful tabs on how you spend your money is the first step toward a speedy and effective payback of your debt. You will be able to pinpoint places in which you can cut costs as a result of doing this. It is essential to stick to your budget as strictly as you possibly can and to keep careful track of all your spending, including very insignificant things like coffee and snacks. This degree of detail will provide a comprehensive and accurate summary of your financial expenditures.

It is crucial to prioritise your debts after you have set a budget and found viable means of decreasing costs. Once you have done this, you can go on to prioritizing your debts. To get started, compile a detailed list of all of your obligations, including the total amount still owed, the interest rate and the minimum payment required for each debt. After that, you should prioritise eliminating the debt that carries the highest interest rate as soon as possible. This strategy will bring about savings in the long run by reducing the amount of interest that has been accumulated over time.

Cut unnecessary spending: If you want to create additional income for debt repayment, one option is to cut expenses that aren't required. This may require cutting down on the number of times you eat out, cancelling subscriptions that aren't being used or looking into more economical choices for insurance coverage and utility bills.

Investigate other potential sources of income: If you are having trouble meeting your financial responsibilities or would like to speed up the process of paying off your debt, investigating other potential sources of income could prove to be useful. This can be accomplished by selling unwanted possessions, engaging in freelance work or even starting a low-scale business. On the other hand, it is essential to consider the amount of time and work that will be necessary and to have reasonable expectations for the amount of additional revenue that may be generated.

Recognise your successes along the route: Repaying debt is frequently a drawn-out and laborious process; this is why it is essential to recognise and honour your accomplishments at various junctures along the way. A boost in morale might come from something as simple as treating yourself to a great lunch or taking a day off to do things that you enjoy doing when you have some free time. Recognising and appreciating your achievements will help you stay motivated and keep your attention on the overarching objective you've set for yourself.

Paying off debt in a timely and effective manner is a crucial component of effective financial management and the quest of financial independence. Keep in mind that the achievement of your goals will be the result of a process that will need both commitment and time.

To recap, if you keep your attention on the task at hand and remain determined, you will be able to make progress toward achieving your financial goals. I wish you the best of luck as you work on paying off your debts.Top of Form

 

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