If you’re feeling trapped by debt, it’s hard to see the light at the end of the tunnel.
Just addressing your debt can cause anxiety and increased stress, which can make it harder to follow through on any debt reduction plans. But, debt doesn’t go away automatically, and in fact, the more you ignore it, the worse it can get.
Instead, find ways to reduce debt now, and you may even be surprised at how quickly you can be successful. These simple strategies have helped others reduce their debt fast, and can do the same for you.
Know Exactly What You Owe
Do you know the balance of your credit card off the top of your head or just the minimum payment that shows up on your bill? What is the balance of your car loan, or of your mortgage? Get yourself organized by making a list of all the creditors you owe, the current balance of those accounts, and the interest rates you are paying for each. When you can see all of these numbers clearly, you can tailor your approach to reducing your total debt.
Pay More Than Your Minimum Payments
If you’re carrying a significant credit card or loan debt, try and make payments greater than the minimum required. When you’re only paying off that minimum amount, the bulk of your debt is still collecting interest – and growing.
You may want to make or rethink a budget as you’re trying to pay down debt. Increase the amount you put towards your debt, and find areas to compromise. If you can skip eating out for a few months and put that money towards your balance, you’ll enjoy that next meal out far more when you’re debt-free.
Ask For Lower Rates
Have you tried calling up creditors to see if they’re flexible with reducing your rate? Put it this way – if you’ve been a cardholder for 15 years, and you regularly pay despite your growing balance, that issuer would probably like to keep you around, and may be amenable to helping you reduce your burden now. It never hurts to ask!
Put Your Big Windfalls To Use
When you get your tax refund check, do you make plans for it, or do you spend it before you even realize? Instead, put any big windfalls, from tax refund checks to inheritances, towards paying off your debt. You won’t miss the money since you weren’t anticipating it, and you’ll be able to reduce your balance and accumulating interest all at once.
Pick One Debt To Focus On At A Time
If you’re only increasing your monthly payment slightly because you are holding several debts, you’ll never see any progress with any of them. Instead, focus on making a more substantial payment to one account – while still paying your others – until that balance is paid down.
Put Down The Credit Cards
If you keep using your credit cards while trying to manage existing debt, you’re never going to reduce credit card debt. Because credit cards carry some of the highest interest rates, you’re actually increasing the risk that you can’t pay off your debt; it’s no wonder Americans currently hold over $13 billion in credit card debt. While you’re working on debt reduction, it’s best to stick with cash and leave the credit cards at home.
Try A Balance Transfer
You probably receive offers for balance transfers from your banks and card issuers, but when you’re in serious debt, they can be a helpful way to get back on your feet. This process makes sense when you can transfer your high-interest credit card debt to a zero-interest account – you’re wiping out that pesky accumulating interest. However, most balance transfer deals only offer this rate for a promotional period, so you want to be sure you can pay off your card before then, or you’ll find yourself trapped by higher rates once again.
Consider Tapping Into Savings
This is a tricky road to go down because you don’t want to deplete your savings entirely while paying off debt. However, because your debt carries interest charges along with it, you’ll probably end up saving more money in the long run if you use some of your savings to pay it off now.
Look Into Temporary Options To Save Big
Let’s say you’re balancing huge student loan debt, a car loan, and struggling to make your rent payments. It might be time to downsize, consider getting roommates, or even move in with family for a short period while you get back on your feet. The key to reducing debt is to ultimately cut your spending, so being flexible with temporary fixes can be a big help.
Cut Out Unnecessary Expenses
If you don’t need it to survive, you don’t need it while you’re paying down debt. Cutting everything from manicures to newspapers to gym memberships can be a way to increase your cash, and you’ll be motivated to find cheaper options in the future to help keep your costs down.
Find A Part-Time Gig
If you’re serious about reducing debt quickly, try getting a part-time job to help bring in some extra cash. Whether it’s driving people around or babysitting for neighbors, every dollar you bring in can go towards paying off your debt.
Reducing debt is an admirable goal and one that is achievable with the right help. Remember to prioritize debt payments in the short-term so that you can live free and clear in the long-term.