We know that being in debt impacts personal and professional growth. You cannot call someone successful if they are in more debt than they make profit (in the long term). Getting into debt is risky, but it is seen as a part of business, especially in the early months and years. No one likes to be indebted, but in this challenging period of COVID-19, SMEs like restaurants, bars, hair salons, and gyms are forced to lay off employees and seek help from the government to aid their loans and outgoings. One way to get out of debt is by making more money to have extra cash to pay for your debts.
In this article, we will look at 3 possible solutions to get out of debt.
- CUT OUT EXPENSES – figure the necessity from the wants and you’ll see how it reduces your expenses. Look at how you are spending money every month and you might be surprised that most of the expenses you take for granted usually don’t make a difference in your everyday life. Tip: Reduce expenses, Negotiate cost, and Eliminate unnecessary expenditures.
- START WITH MOST EXPENSIVE DEBT – you do not just pay your debt to various lenders but you should analyse which among them you owe the most. Do not spread out minimum payments because it won’t bring any success. Focus yourself on the most expensive debt first. You will move to the next payment later on after settling the one that costs you the most.
- AVOID GETTING ANOTHER DEBT – Do not get into the debt cycle and take out a loan to repay a loan, unless the terms are better and you really can combine all debts into one. If your debt continues to grow, you will fail to make payments and that could lead to bankruptcy or the loss of assets.
For some businesses that can’t manage their debts, it may be time to file for bankruptcy, selling the business, or liquidating all assets but hopefully, it won’t go that way. With these few tips, you might find ways on how to reduce your debt and eventually get rid of them.