Souqalmal: How to pay off debt on a low income
It’s difficult to escape the obligations of debt when you live from paycheck to paycheck. Many struggling borrowers find it immensely difficult to get a grip on their finances – After all, dealing with debt while managing other commitments on a low income may make it seem like you’re walking a financial tightrope.
Be that as it may and regardless of how little your pay or how huge your debt levels, you can bid adieu to debt through a series of simple steps.
The team over at Souqalmal.com has shortlisted a few simple tips to help you stave off financial backlogs when living below the minimum income range.
1) Develop a more stripped down financial budget
The initial phase in the beginning to alleviate debt is to set up a stripped down, ‘no-frills’ spending plan. Such a bare-bones financial scheme covers your outright least needs. To begin, you have to determine the base expense of your regular necessities. This incorporates things like lease, utilities, and your vehicle as some examples. Check whether you can bring down these bills. For example, you could use a coupon to get a good deal on basic needs or shop for discounted items. On the off chance that you find yourself paying too much rent, you could move to cheaper accommodation in a less pricey neighborhood.
The purpose of making such a stripped-down spending plan is to liberate as much cash as could be expected. Consequently, you toss any free cash towards your debt repayment.
2) Tackle weaknesses in spending
We as a whole have shortcomings and weaknesses when it comes to handling finances. The important thing is to recognize where your shortcomings are and make sense of how you can beat them. For some, shopping at malls could be a drain on the finances. For others, it could be excessive traveling or more lavish spending habits. Whatever these weaker monetary habits may be, they could end up costing you tremendously when already in debt. Motivate yourself to stay clear of these habits with the knowledge that when you pay off your debts, you can return to spending more liberally.
3) Try refinancing your debts
Refinancing is a procedure under which another company purchases away your debt. In return, you get a lower interest rate from this new company while you repay the debts to them. This is extraordinarily helpful in light of the fact that it can help you save money through interest rates. With a lower income, even the smallest added interest rate could prove extremely taxing in the long run, accumulating into something much higher over many years. As a result, refinancing could be useful to you.
4) Maintain an ‘emergency fund’
Without an emergency savings fund to back you up during rainy days, you remain at the mercy of chance and are at risk of wrecking your long-term financial plans. Sudden financial tolls could impair the repayment process, and a single minor crisis could totally send all your plans for a toss. It may be a good idea to stash away about six months worth of expenses in your emergency saving fund. The key is to ensure you can cover unpredictable and sudden expenses.
5) Give yourself financial rewards
Despite doing everything right, debt reimbursement can basically extract a serious mental toll. Satisfying the obligations of debt on a low income can definitely wind up tiring you. To prop yourself up, give yourself a couple of dirhams per month to spend, as you like. Putting aside 100 bucks to eat with companions once every month or 50 bucks to go see a movie can go far in helping you stay focused on your debt payment avenues. This system of rewarding yourself helps you retain your mental peace through the entire process and also ensures that you preserve the energy required for the long haul.