These days, it’s easy to get into an almost-endless cycle of debt. Take credit cards, for example. The company charges interest into your remaining balance, so the more you pay only the minimum amount, the more money you should spend on interest only. Currently, Americans owe billions of credit card debt! But there’s a silver lining: you can make your debts easier to pay off!
Save yourself from being chained to the debt by remembering these tips:
1. Know your debt management options.
If your debt becomes uncontrollable, learn your available options, which include home refinancing, debt settlement, and debt consolidation.
In home refinancing, lenders allow you to apply a second mortgage for your home to pay off your existing loan. In the process, you can take advantage of a lower interest and a better payment term. In debt settlement, you negotiate with your lender the total debt to pay (along with other fees). Lenders, for example, can remove interest repayments, so you pay only the principal and charges. Debt consolidation, meanwhile, means grouping your existing debts and getting a new loan to pay them off, so you have only one debt to focus on.
A good example of debt consolidation is balance transfers, which work well if you have more than two credit cards. In this strategy, you ask your issuer to move the remaining debt in Card A to Card B, which has a lower interest rate.
2. Avoid late repayments.
Late payments mean additional fees and charges, which then increase your total debt. The amount you pay may be fixed or based on a percentage of your due. Either way, it’s a preventable expense, and on-time payments help improve your debt. If you’re having trouble keeping tabs on your numerous debts, you can consolidate your debt or automate the payments.
3. Prioritize paying off debts.
One of the ways to make your debts easier to pay off is to make debt payment your first objective. Otherwise, debts only offset your savings. Long payment terms also imply a huge chunk of your income goes to interest alone. Some ideas include:
· Create a budget, funneling most of your savings to debt payments
· Cut back on unnecessary spending such as trips to Starbucks or taxicabs
· Live within your means. A budget is handy for this one.
· Schedule your payments as soon as income comes in.
How do you prioritize multiple debts? Focus on those with the highest interest rate.
4. Take an extra job.
If your current job isn’t enough, then look for extra income especially on weekends. Then direct all your wages to debt payment. It’s tough, but it’s a small sacrifice to make toward achieving financial freedom.
Theoretically, debts are not the monsters in our lives – it’s how we use them that can make or break your finances. If you ever find yourself in a bind, though, don’t forget you can make your debts easier to pay off, beginning with the above-mentioned tips.
Our experts can give you tips on debt management so you can make your debts easier to pay off. Visit our treasure trove of knowledget at Debt Consolidation Programs today.