Debts are inevitable. We take on loans to fulfill critical needs in our lives, like education, medical bills, etc., when we can’t pay for them. The problem is that the debts come with interest, and as they say, “Interest on debts grow without rain.”
The more interest adds to the principal sum, and the more your financial debts build up. The Universiti Sains Islam Malaysia’s Faculty of Leadership and Management study found a strong correlation between financial debts and debt stress. It suggests that you will fall into debt stress if your debt obligations pile up due to growing interest.
Thankfully, there are many creative ways to claw yourself out of the situation. This article discusses several easy-to-do tricks for paying off debt fast. However, it is critical to note that the tricks might not suit every debtor’s situation. Good luck if you find these tips helpful.
1. Gamify debt repayment
We all enjoy games. Just take a moment and go back to your school days when game time was all you looked forward to. Could gamifying debt repayment make it less daunting?
Gamification is a concept that caught steam in the early 2000s as organizations looked for innovative ways to engage employees. How do you gamify paying off debt? It means inserting gameplay in non-gaming situations.
Take two jars and fill one of them with marbles – use rocks if marbles are out of reach. Label the marble-filled jar OUTSTANDING DEBT and the empty one SETTLED DEBT. Put a monetary value on each marble, and take out marbles whose value equals the debt amount paid at every installment. Place the marbles in the SETTLED DEBT jar. Play this game until the OUTSTANDING DEBT jar is empty.
2. Find a side hustle
The gig economy is a phrase thrown around frequently nowadays. The phrase refers to a labor market dominated by short-term freelance work as opposed to permanent contracts. The prevalence of gig economy jobs means that people in the traditional labor market can find side gigs for extra income.
Thankfully, most of the gig economy jobs are undemanding and doable outside regular working hours. If the outstanding loan is backbreaking to your current paycheck, find something in the gig economy for supplemental income.
3. Pick a payoff strategy
There are three primary strategies for paying off debt quickly. The avalanche method prioritizes high-interest loans. Recall we said that interest grows even without rain, and the higher it is, the more it hurts. Paying off high-interest loans first reduces the total loan amount.
Secondly, there is the snowball method. This strategy prioritizes loans with the smallest balance. It starts from the easy onwards until it finishes off with the most challenging task. After every payoff, you allocate the extra funds to the following loan until you have all the energy channeled to a single loan.
The problem with the snowball approach is that you end up taking longer to clear the debts, which also means paying more due to higher interest expenses.
Lastly, there is the snowflake approach. This approach takes advantage of any extra cash earned from, say, bonuses, tax refunds, cashback programs from online shopping platforms, etc.
4. Adjust the payment schedule
Most creditors schedule monthly debt payments. If you find that you have sufficient income to switch the payment schedule to fortnightly, please do. Since you will be paying the same amount twice a month, which cuts the loan repayment period right in the middle. In the end, you will save more money from interest costs.
Probably, this is not a good idea, especially when there is a recession around everyone. But hey, it won’t hurt to try.
In this era of social media, there is a greater sense of community than ever before. People identify more with one another’s plight, and they are more open to helping out.
There are many people out there who have seen their lives change by opening up about their struggles. People have had GoFundMe accounts opened for them, and swarms of strangers have donated funds. If you feel you have hit the wall, generate a buzz about your situation, and a door might open.
The Bottom Line
They say that only two people will always be there at your lowest, a close friend and creditors. When the conventional strategy fails to work, you have the license to get as creative as possible to make sure you are debt-free.