If you want to downsize your debt, you can take steps.

The first step is prioritizing what needs to be paid off and what can be shifted around.

This will help you find the right balance between your debts and priorities.

Next, you may consider downsizing your home. This involves trading your large home for a cheaper house in a more affordable neighborhood.

4 Simple-most To Downsize Your Debt

1. Downsizing

Design your rooms and organize your belongings. Creating this structure will help you find the right place for your belongings. Downsizing is essential, but you must downsize to fit your new place.

While downsizing can be expensive, it requires a credit score and lots of cash to complete it. However, there are many benefits to downsizing your life.

Downsizing your home can save you money on mortgage payments and other expenses. It may also mean saving on home repairs and buying more miniature furniture and appliances. Moreover, downsizing your home can save you money on property taxes and HOA fees.

2. Debt Management Plan

Bank on a debt management plan to resolve your debt. These plans, typically developed in collaboration with your creditors and a nonprofit debt counseling agency, aim to consolidate your loans at a lower interest rate and for a more extended repayment period.

The agency is usually paid a small fee. These organizations, such as Priority Plus Financial, negotiate with your creditors to see if you can pay a lump sum less than the total amount owed.

Then, you deposit money into a monthly savings account to accumulate that lump sum.

3. Prioritizing

Prioritizing to downsize your debt can be difficult, but knowing which bills are the most important is essential. For instance, if you have a large balance on your credit cards, pay them first.

This way, companies are less likely to send your debt to collections. Non-essential debt, on the other hand, should go to the bottom of your list. These include non-urgent bills like membership fees and subscriptions, as well as obligations for repairs. As time goes on, these debts can be added back into your monthly bill cycle.

To get started, list your debts by interest rates and balance. Then, prioritize them based on these two criteria. For example, the debt with the highest interest rate should be paid off first.

Similarly, if you have a low balance, you should focus on paying off the smaller balance first. Paying off the smaller balance first will give you a psychological boost.

4. Finding a second income

Another effective strategy is to get a side job. These jobs can help you pay off your debt and provide additional income.

Some possible side jobs include freelancing online, driving a less expensive car, walking dogs, or tutoring students. Making a list of your debts and the side jobs that can help you save money can help you plan your strategy.

One of the biggest obstacles to downsizing your debt is the cost of housing. Many people spend 36 percent or more of their income on housing.

However, financial experts and lenders recommend a lower housing expense ratio to income. Downsizing your home can be easier than you think.

If you can’t afford the rent, give up paid parking space, offer to do some repairs for it, or simply move to a cheaper neighborhood.

Additionals:

• The 2021 Guide to Buying Real Estate
• Grant vs loan – What Is the Difference Between Grant And Loan?