4 Ways To Reduce Debt

No one plans to go into debt and many can’t even remember how they got there. You may have had every intention of paying what you owe, but then something happened. Perhaps you had a medical emergency or you lost your job. Whatever the case may be, you are now looking for the best debt reduction method for your situation. 

That’s an important thing to keep in mind: it’s your situation. Therefore, what may have worked for somebody else may or may not work for you. Their level of debt may differ, they probably have a different financial profile, and their money habits most likely vary from yours in one way or another. Of course, their method could work, but you should consider it carefully before you jump into it.

That being said, just about any type of debt reduction has the ability to work. The only thing that differs is the person trying to follow it. With that in mind, here are a few options for you to consider.

1 – Debt consolidation

This is where you combine all of your various debt into one large debt. On the surface that may sound like you are only creating one big problem for yourself, but there’s more to it. The reason consolidating debt is such an attractive option is that you can get a lower, overall rate, and you will also have one payment to deal with instead of several. The downside is that you have to be disciplined enough with your money that you don’t start running up your debt again. If you can keep from doing that, then this may be a good choice for you.

2 – Debt settlement

If you have fallen way behind on making payments and your debt is spiralling out of control, then debt settlement may make more sense for you. You can do this yourself or hire a qualified agency to do it for you. The idea is that you (or your representative) will deal directly with each of your creditors to get them to lower how much you owe. It’s typical to save 25% to 50%, and that really adds up. Again, this is the best debt reduction for those who are far behind on their payments, as your creditors are willing to take a small loss on what you owe if they think you would otherwise not be be able to pay anything at all.

3 – Balance transfers

If you have a lot of credit cards with high interest rates, then transferring the balances to lower rate cards could be your best debt reduction option. You need to be careful to read all of the fine print. Some credit cards will charge you a fee for making a transfer to their card. Others will charge a low introductory fee, which will go up after a set amount of time. That doesn’t mean the offers are bad, but it does mean you need to understand all of the terms and conditions before making a transfer.

4 – Contract transfers / reduced outgoings 

Review all your outgoings and see where it may be possible to reduce  or cancel spend. Maybe you can spend less on groceries and socialising or maybe some of your contract-based services like gym memberships, cleaning services or leased electrical goods can be cancelled early. If you are in rented accommodation maybe you can seek to cancel that contract and move in with relatives so you can clear your debts quicker. If you have a leased car that you don’t really use, you could look into terminating that contract early too but before you get too excited, be aware that some contract service providers may charge a fee for early contract termination and some may not allow it altogether.

However, even though early contact termination is not always possible, there are some contract service providers that will allow contracts to be transferred onto someone else.

Because some contracts including gym, lease cars, accommodation and electric goods are transferable, Contract Village can help you connect with people looking for contracts just like yours so you can avoid paying for early termination or be stuck paying for a contract which no longer suits you.

Before listing your contract you’ll need to check if the contract is transferable.

Click here to get started. 

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