Are you struggling to make ends meet and your debts are piling up? These are things that do happen, but it is not inevitable!
I have always heard that to avoid getting into too much debt, you need to save a lot of money. Many people are wondering if there is a way to avoid getting into too much debt, without saving a lot of money. For instance, is it possible to have a mortgage of a reasonable amount, without having to save a lot of money ?
Here are some strategies to help you pay off debt faster so you can use your money for what matters most:
Consolidate your debts
If you have a good credit rating, consolidate your debt in the bank or get a line of credit. So you pay off your debts right away and you only have to make one monthly payment, usually at a lower interest rate. This simplifies your situation, which can help reduce your stress.
Then you can Ask your lender for a lower rate. If the first person you talk to can’t help you, ask to speak to their supervisor. If you’ve always paid on time, that person might agree to lower your interest rate so that you continue to do business with the company they represent.
Start with the debts with the highest interest rate
Make a list of all of your debts (credit cards, student loans, car loans, bank loans and personal loans, etc.) to get a full picture of your situation. Pay off at least the minimum amount on all of your debts when they are due, and use the rest of your money to pay off the debt with the highest interest rate (usually your credit card debt). You’ll get rid of debt faster and save money. Some financial experts suggest paying off the loans with the lowest balance first. The satisfaction of taking your debts off the list can motivate you to stick to your plan. You will need to find which plan works best for you.
Set a budget and stick to it
To keep debt from swelling further, cut back on non-essential spending. Knowing what to spend each month will help you make responsible spending decisions.
Can you save money by going to restaurants less often or by limiting your non-essential purchases? By reducing your budget, you will have more money to pay off your debts.
Stop using your credit cards
There is no need to cancel or cut your credit cards. Keep them in a safe place and stop shopping with these cards until you have paid off your debts.
Find a way to make some more money.
If possible, consider taking another job until you get the situation right or get rid of your debt. Selling an asset that you don’t need is another option for putting more money into paying off your debt.
If you can’t find a solution to reducing your debt, consider talking to a financial planner or to a credit counselor. In addition, non-profit credit counseling agencies help people with their debt problems. These agencies can help you design a plan, lower your interest charges, and gradually pay off your debt.