Getting out of debt can be a tricky proposition. However, it is also a task that a lot of people like to tackle at the outset of a new year.
However, generally speaking, there are two moves with which you should start: look for additional income, and prioritize your debts.
Finding Additional Income
Finding additional income is easier said than done. However, one good place to start is to look into stable investment opportunities. This, too, is easier said than done, but there are alternative investments available that offer you some stabilization options with relatively low risk.
For example, many people looking to invest for stability and gradual gain (rather than dramatic gain with high risk) turn to sites like Bullionvault where you can safely purchase and store gold bullion.
Investing in precious metal allows you to switch your finances from currency to the resource itself, which in turn can save you from depreciating currency value that so often accompanies shaky economies. In this way, investing in gold may be able to save you from losing value on your money, and as other investors all over the world buy gold as well, it can gradually make you money, if the price of gold should rise.
This is merely one example of an investment opportunity that is often viewed as a potential stabilizer, and therefore may be of assistance as you set about addressing your debt.
Prioritizing Your Debts
Many people, when devising a strategy for eliminating debt, are tempted to do what seems natural – eliminate the largest debt first.
This can certainly be an appealing idea, and essentially helps you to tackle the hardest problem first. Theoretically, things will only get easier from then on out. However, others prefer to eliminate more sources of debt more quickly, rather than the largest one first. Here’s how it can be done fairly efficiently.
It’s called the “debt snowball,” and it can move you quickly toward knocking out various debts. The idea is to analyze your finances and figure out what amount each month you can put toward paying off your debts. Then, divide that amount among your debts each month.
Naturally, the smallest debt will be paid off first, and that is when the snowball takes effect. Instead of continuing to put the same amount toward each debt, you can add the amount that is freed up by paying off the first debt to the pile – thus increasing the amount you can pay toward each debt. This is a very efficient way to knock out debts, and a great principle to base your efforts on.