Whether in the form of student loans, credit card bills or car payments, a large amount of debt can prevent you from securing the financing needed for a new home, car or other large purchase. More than likely, you are also paying interest on this debt, which is costing you even more. Make a resolution this year to pay down your debts.
Follow these simple tips to get started:
Prioritize by interest rate – Sort your debt by interest rate and focus on tackling the debt with the highest rate. This is the debt costing you the most money, so ridding yourself of it first will be most beneficial.
Pay more than the minimum – To make significant progress on liquidating debt, pay more than the monthly payment. These required monthly payments are typically only 2-3 percent of the outstanding balance and therefore do not do much for decreasing your total debt. Set your focus on first paying more than the monthly minimum on the debt with the highest interest rate. Then, once that is paid off, increase your payment amounts on your other debts until those are also paid off.
Consolidate debt – Look into balance transfers from your high-interest rate credit cards to a card with a lower interest rate. While this may sometimes incur a small transfer fee, the fee may be less than the interest you are currently paying.
Consider taking a break from credit cards – The best way to stop accumulating debt is to stop using credit cards. If you have a significant amount of debt, it is a good idea to put your credit cards away until you have your finances more under control.
Use bonuses wisely – If you receive a bonus from an employer, use that money toward debt rather than making a purchase.
Reprioritize your budget – Set aside the funds for monthly expenses such as housing, food and transportation. Next, look for areas where you can cut spending and use that money to pay down debt.
I would love to help you by discussing your financial situation and giving you more tips on how to eliminate debt and prepare for your financial future. Call me today to set up an appointment!Tags: Debt