Maybe some of us hate paying our bills, but, paying our debt, especially on time, greatly reduces the stress that living with debt puts us through. Because more than just any scary kind of ghost, your credit card company can haunt you every step of the way if you don’t take measures to eliminate debt from your life completely. So if you want to take down your debt with a hard tackle behind the knees to finally put it to rest, here are some ways:
Know where you stand. Before paying your debts, know where you stand. A lot of people tell themselves they’ve only got a little bit of debt. But in reality, that teeny tiny figure could be three or five times bigger. You’ll never hit your target savings if you don’t take care of your debt first. So be brutally honest with yourself when it comes to your financial situation.
Track and budget. Get an accurate sense of your monthly spending and track your costs. This is crucial to your budget. After that, get an ax—metaphorical, not a literal one—and take away all your wants and focus on your needs. Cut out Friday nights, a few pizza meals, and some of those movie nightouts with pals. This can give you the extra money you need to get your debt payment on track.
Stop creating new debt. It’ going to be impossible to get out of debt if you’re still careless in your spending habits. Don’t shop indiscriminately. If you think it’ll help you control your spending habits, cut up your credit cards or freeze them.
Pay more than the minimum payment. Credit card companies love to put that minimum payment in bold because you paying just the minimum means they get to earn more interest out of the whole deal. That also means you’re paying them more than you should because of the interest rate.So, if you can, try to pay more than the minimum.
Pay off debt with the highest interest rate first. For obvious reasons, prioritisepaying the company with an 11% interest rate than those with 9%, 5%, etc. Focus all your attention on that debt. Pay it off before even trying to resolve all other debts you have. Yes, you’re still paying for the interest for these other debts but at least you’re paying at a lower rate.
“Snowball” your debts. If all the interest rates of all your credit cards are almost the same, make the minimum payments on all and pay all the debt on the lowest one so that it disappears quickly. Once done, add the payments you would have paid on your lowest debt to another one until it disappears, too. Repeat until all your debts are cleared. Fun? No. But knowing you’re doing something to reduce your debt each month will make the process a little more bearable.
Do balance transfers.Make use of promotional offers like transfer-all-your-credit-card-balances-to-us-pay-a-lower-interest promos. Moving from an original sky-high 18% per month to 5% interest is worth it. But, take care and examine the offer closely. Don’t be taken in by hidden charges. Always, always read the fine print.
Use your life insurance. Yes, borrow from your own money. Though, the interest is typically good below commercial rates, you can take your time repaying it—but remember that you have to. Otherwise, if you pass away before it’s been repaid, the outstanding balance plus interest will be deducted from the value of your policy.
Find your motivation and support. Create goals and stay focused. Studies suggest it’s better if you find a community to swap stories with—of successes and failures—for support when it comes to personal financial challenges. If you’re tempted to overspend, you can talk to someone in that community and basically remind yourself of the bigger picture, of your goals, of what you’re after. Hopefully, this will help you regain the perspective you momentarily lost when that urge to splurge hit you and allow you to keep your eye on the goal.
Track your progress and reward yourself.Know how good you’re doing. Remind yourself to check up on your finances and progress every few weeks.
With these tips in mind, you can find a way to resolve your debt as swiftly as possible.
