Are you in debt?
Even if you’re not now, chances are you will be at one time or another at some point in your life. If not properly handled, going into debt can become financially burdensome and extremely stressful. The good news is that there are many strategies that you can employ to help in paying off debt. Here are five excellent debt-elimination strategies to use.
Paying Off Debt
1) Only Use a Credit Card for Emergencies
Credit card debt is one of the worst types of debt to be in. The interest terms on credit cards tend to be higher than those associated with loans and other types of debt, making any debt you have on a credit card grow at an immense rate. An excellent way to get yourself out of debt is to stop going into it, so cut up all your credit cards except for one. The one that you choose not to cut up is meant to have only for emergencies. EMERGENCIES ONLY! A sale on a new purse or set of golf clubs is not an emergency!
2) Pay Off Debt: More than Your Minimum Monthly Payments
When it comes to repaying your debt, do your best to pay more than what is asked of you each month. If your minimum monthly payment is $40, pay $60. In doing so, you can get yourself out of debt on certain loans and credit card debt much quicker than anticipated. If you choose to employ this strategy, make sure you choose a debt with a high interest rate to pay extra money towards; this helps keep the debt amount as minimal as possible until it is paid off.
3) Ask for Lower Interest Rates
An excellent way to get out of debt quickly is to call your creditors and ask them to lower your interest rates. Sometimes they will, sometimes they won’t. Whether they do or not, it can’t hurt to try.
4) Pay Off Your Lowest Amounts First
Many people have begun paying off their debts by first paying off their lowest amounts first. For example, say a person has four different credit cards, with the debts being $100, $300, $ 700, and $1,200. If a person chooses to pay off their lowest amounts first, he or she can probably eliminate the first two debts very quickly. In doing so, all money that was originally paid towards them can then be used to pay off the two remaining debts. This debt reduction strategy can help you quickly reduce the number of sources in which you are in debt to, which helps reduce not only the amount of debt you are in but stress too.
5) Consolidate Your Debt
One of the best things you can do when it comes to eliminating debt is to consolidate it, especially if you have a number of different debt accounts that have high interest rates tied to them. By consolidating them, you can combine them into a one debt account that has a lower interest rate. Even though your initial balance on the consolidated account may be high in number, due to the lower interest rate that is accompanied with it, you will save money in the long run. Another great advantage you can gain by consolidating your debts is that you no longer have to deal with the headache of trying to make several different payments on time each month. Instead, all of your time and financial funds can be focused on a single loan.
See Also:
High Performance Savings Accounts
Choosing Between Secured and Unsecured Loans
3 Tips for Saving Money on Your First Mortgage
Photo Credits: by eric731Â |Â Debt Free Valentine Flickr