It’s not wrong to have debt — it can be a useful tool. But it’s easy for loans to become overwhelming.
In fact, they start to feel like no matter how on top of them you are, they never get smaller.
If you’re starting to feel like there’s no way to get around or through your debt, look no further. We’re going to help you take steps to feel like you’re back in control.
Let’s jump in!
Restructuring Cash Flow
OK, you’re probably thinking, “I don’t have enough cash — there’s nothing to restructure!”
It’s a fair point. But not so fast:
We’re going to show you how you can free up funds, so you can increase your payment amount and reduce your debt.
If you can adjust your strategy — even temporarily — and focus on just one of the following proven methods, you’ll be on your way to higher payments and dwindling your debt.
By the way, notice I said “even temporarily.” Adjustments can be as temporary or as permanent as you need them to be.
For example, you could cut certain nonessential expenses, work on paying down the debt, and then resume taking on those expenses once the debt is paid off.
Increase flow and conversions
This is the most straightforward thing to do because it brings in more money. You can put that extra money toward debt before investing it in your business.
And yes, you can go all out and spend money on marketing and such — but you don’t have to. There are tried-and-true ways to get noticed by prospective patients without breaking the bank:
Post blogs on a regular basis. It’s easy and effective. You show your expertise, stand out as a reliable resource, and boost your chances of getting seen on Google. Your best source for topics? Your own patients, whose questions show what people want to know.
Get active on social media. Social media is an easy way share practice news, talk about upcoming events, highlight recent blog posts, link to articles about hearing health, and reveal new hearing aid offerings.
Engage with your community. Get the word out and be seen by holding lunch-n-learns and seminars, hosting interactive booths at popular city events, or offering complimentary clean and check days at local senior centers and assisted-living facilities.
Yes, you read all that right. These things take time and energy you probably don’t have.
But wait, here’s the best part:
Consider assigning a captain in your practice to make sure these things happen. Captainships are a tool that — when wielded effectively — can work wonders in more than one area of your practice.
Reduce your expenses
You might be thinking, “I’m struggling to stay on top of my current patient load. I can’t sign on for even more!”
Every practice is different. Maybe yours isn’t in a position to handle growth right now. So, take a look at expenses — are there any you can reduce or eliminate, even temporarily?
As mentioned above, for example, are there some nonessential expenses you can cut, work on paying down the debt, and then resume taking on those expenses once the debt is paid off?
Collect on outstanding invoices
Many businesses have a lot of money on paper — but only on paper. It’s not coming in as revenue.
Think about that for a minute.
What if a simple fine-tune of your process could get that money in the door? Something as simple as implementing optimized scheduling can free up employee time to focus on collections.
Insurance companies aren’t going to willingly pay in advance of 90 days — or at all — without being prompted. Prompting a patient will typically get you paid with the month or, for insurance companies, 30 or 60 days out.
It’s as simple as getting it on your block schedule and making those calls. Even better, this fine-tuning keeps your collections on firm footing now and in the future.
Partner with a pro
When in doubt, there’s always the financial advisor route. They can help you develop a budget, strategize, and possibly even support you in executing your strategy.
Implementing a Debt-Reduction Strategy
Not all debt is created equal. Explore your options so you pay off your debt in the way that makes the most sense for your situation.
It’s not without risk. For example, if you consolidate loans but have more debt beyond that, it can do more harm than good, so check with your financial advisor.
Speak with your creditors directly
You might be overwhelmed. If that’s the case, and you’re not sure what to do, talk to your creditors.
Many offer hardship plans. If you can show you have cashflow struggles, they might offer a reduced-payment option for your loan. If that’s not possible, ask for a settlement, in which you pay a reduced total loan amount.
Consolidate your loans
In some cases, consolidating your loans makes sense.
If you have multiple short-term loans, consolidating them into one long-term loan can reduce the monthly payment. It doesn’t reduce the total debt, but it frees up monthly cash flow.
Implementing a Debt-Reduction Strategy for Multiple Debts
It can feel hopeless — even paralyzing — to have multiple large debts. Here are a couple of proven strategies to get you back to a firm foundation.
The snowball method
Snowball strategy is to pay off your debt as quickly as possible. It works like this:
For all your debts other than the smallest one, make only the minimum payment. Devote whatever funds you can to paying off your smallest debt first.
When that debt is paid off, take the money you were paying toward it and add it to the minimum payment of your next smallest debt.
And repeat.
Do that process over and over, so it’s like a snowball. Your payment amount starts small and grows as you move on to the next debt.
Let’s look at an example. You have three debts:
$700 credit card debt, $70 minimum payment
$2,000 credit card debt, $100 minimum payment
$10,000 loan, $100 minimum payment
In the snowball method, you focus on the $700 debt and pay only the minimum on the other two.
Let’s say that paying only the minimum on the bigger debts frees up an extra $200 per month. Now you’re paying $270 per month toward your smaller credit card bill ($70 minimum payment plus the freed-up $200). You pay off the $700 credit card in no time!
But wait, it gets better. Now you can add that freed-up $270 to the $100 minimum payment on the $2,000 credit card bill. Paying $370 per month wipes out that debt in about half a year!
Now take that $370 you were paying — add it to the $100 minimum payment on your student loan. Now you’re throwing $470 a month at your student loan!
As you can see, the payment starts small at the top of the mountain, and as it rolls down, it gets bigger and bigger. When you get to your largest debt, you’re also making large monthly payments, so the debt becomes manageable.
The avalanche method
The avalanche method follows a very similar strategy as the snowball. The difference is instead of choosing the smallest debt to pay off, you choose the debt with the highest interest rate.
You pay only one debt off at a time and pay the minimum on the others, but you’re paying off the debt with the highest interest rate first. And as you pay off individual debts, you roll that payment into the next debt’s monthly payment, like in the snowball method.
The advantage? It does take longer to pay off debts, but the avalanche method allows less interest to accumulate, so you pay less interest.
Which strategy is right for you?
The only way to know which is better for you is to solidify your goals. Both will help you pay off your debts in full.
Support for Your Financial Freedom
Our finance managers have the analytics and the debt-reduction tools to help you see the possibilities, both snowball and avalanche.
Interested in learning more? Follow the appropriate link below!