Tips for Getting Yourself Out of Debt Faster

Debt can be crippling. It can seem like you’ll never reach that debt-free light at the end of the tunnel. But all is not lost. These tips will help you become more organized with your debt, discover ways to pay it off more effectively and efficiently, and, hopefully, save you money.

Use Your Savings Account to Pay Down Debt

We understand the dilemma. No one wants to deplete the money they have saved in the bank to pay off daunting debt. But you can use your savings accounts to maximize your payments and reduce money owed – without draining every last penny. After all, once the owed money is paid off, you’ll be able to save up again with one less bill following you around.

Choose the Best Repayment Plan

Debt decreases as you pay it down, but how can you determine the best repayment plan for your budget? There are two main debt repayment options: debt snowball and debt avalanche. Figuring out the best one may take some time and additional research.

The debt snowball repayment plan suggests that you first pay off your smallest debt while making the minimum payments on all other debts. Technically, any extra cash you have at the end of the month should go toward your smallest debt. Once the smallest debt is paid off, you then “snowball” the money from that monthly payment into the next smallest debt. Paying off one loan or credit card at a time will build confidence and get you one step closer to financial freedom.

The debt avalanche repayment plan is a bit different. Instead of paying off the smallest debt first, this method suggests you throw extra payments each month toward your debt with the highest interest rate. After the highest interest rate is paid down, you’re then encouraged to move onto the second-highest interest rate to save money in the long run.

Pay More Than the Minimum

Minimum payments can trick your brain into thinking that the balance due is all you have to pay to reduce debt quickly. That assumption is wrong. Paying the monthly minimum means you will pay the maximum amount of interest owed and drain you of well-earned cash over a more extended period. Instead, try your best to pay the minimum and then some. Budget out each month to see how much extra funds you can pay over the minimum.

Use the Balance Transfer Offered Through Your Credit Card

Most credit card mail goes directly to the trash – unless it’s a bill that needs to be paid. But that means you could be dismissing offers like new applications bonuses, low-interest rates, and balance transfers.

Balance transfers through credit card agencies almost always have a 0% interest rate for at least 12 months. This can save you money while you get ahead on your debt paydown. From there, the interest rate probably jumps sky-high, but you can always do another transfer to a different card or apply for a personal loan. A small fee of 1%-5% may apply for the transfer, but this can be a good option to reduce overall debt.

Start a Side Hustle

Think about your skills. Are you a good writer? Do you work well in design? Could you create items for purchase online? Know what you’re good at and use it to your advantage. You can also think about stuff around the house you can sell, like clothes, books, shoes, and kitchenware. Every little bit counts!

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