- line all the debt up from highest interest rate to lowest. While you want to make the minimum payments on all the debts, any extra money should ALL go to the debt with the highest interest rate first.
- you may want to talk to a community self-help group (check at your local library) on taking classes on basic personal budgeting. Getting debt under control is a function of getting spending under control
No matter what kind of debt you are in it may take years and meticulous planning to have it settled. But, there are some strategies you can make use of to clear your outstanding dues.
- Snowball method - List all of your existing debts such as personal loan, credit card etc. and divert all the excess funds towards settling the smallest debt first. Then move on to the next debt and gradually you will be able to clear off all your debts.
- Take up an additional job - you can turn any of your hobby such as teaching, writing, driving etc. into a part-time job to pay off your outstanding.
- Cost-cutting - maintain a monthly budget and stick to it. The extra funds can be used to pay off the loan by having their EMIs increased by a small percentage say 5% every month. If you evaluate this yearly this turns to a big amount which can have your loan sorted out.
- Negotiation - if you find the interest rates on your credit cards are too high you can call up your Relationship Manager and have the rates negotiated or eliminated. This will help you to lower down the EMIs on the card and settle the debt faster.