Everyone carrying a sizeable debt burden tells a similar story: it is so much easier to get into debt than get out of it. Having to make large debt payments each month leaves you with limited savings. Without savings, taking a short vacation each year to recharge the batteries and catch some sun becomes almost impossible.
Here are four strategies for reducing your monthly repayments, so you can put some money aside each month for a short family getaway this summer.
Consolidate Your Debt
One of the first options available to explore is debt consolidation. If you are indebted to financial institutions, you are likely paying a high rate of interest. Consolidating your debt involves paying off your debt with one loan from a debt consolidator provider. You then pay back this loan from the provider.
Instead of having to pay all your creditors each month, you simply have one payment to make, often at a significantly reduced interest rate and a lower monthly repayment. Debt relief options like this are a simple way to reduce your monthly outgoings to creditors and give you a little extra each month to put in the vacation fund.
Call Your Creditors and Ask for a Lower Rate
Sometimes something as simple as calling the creditor or financial institution and explaining your situation can be enough to get them to shave a small amount off your interest repayments. Providing you have been consistent with repayments and you haven’t missed any payments in the last year, you may be in the position to ask for a lower rate of interest.
If your debt is from a credit card, shop around and find the interest rates other cards are offering, then call your credit card company and ask if they will match the lowest rate you have found. They may not agree to it immediately, but if you remain adamant that you will transfer your debt to another company with a lower rate, they may choose to reduce your interest payments to keep your business.
File for Bankruptcy
If your debt is considerably more than you can ever pay back, it may be time to file for bankruptcy. You cannot abuse the system. New laws mean you will first have to fill in an income-debt comparison and work with a credit counsellor before you can file. However, once you have filed for bankruptcy and gone through the process, certain debts will be written off.
Revise Your Spending Habits
Sometimes nothing is going to give, and you just have to tighten your belt to save for that vacation. If you have not done so already, it might be time to sit down with your significant other and explore ways to cut back on the outgoings.
The small, regular payments are often the hardest to forgo but could save you the most money. Do you really need to buy coffee every morning? Could you not just wake up five minutes earlier and make your own? Do you need to eat out once a week?
These small cutbacks will save you a significant chunk of money over the course of a year, allowing you to get on a plane and enjoy a well-earned vacation each summer.