Debt is a way of life for most Americans, but there comes a time when it must be repaid. When your monthly debt payments are making it difficult to live life to the fullest, it’s time to reduce your debt and get better control of your money. Here are some strategies for tackling debt before it tackles you.
- Consider a Debt Relief Program
When trying to figure out the best way to get out of debt, your first stop should be a debt relief program. A good program will not only advise you on dealing with increasing debts, but also provide an actionable program to help you pay back your creditors. Do some research on debt relief programs and choose one that will be more beneficial to you.
- Consolidate Debts
One of the biggest problems those with a high volume of debt face is keeping up with all the payments they have. Most people have several sources of loans and credit cards that need paying separately, and it’s easy to let some bills fall through the cracks. When you miss your payments, it hurts your credit score.
Talk to your financial institution or debt relief program advisor about consolidating your debts into fewer accounts. This may result in a small fee, but if it can lower your interest rates and prevent future missed payments, it will pay for itself in the end.
- Cut Up Credit Cards
The only way you can truly get out of debt is by stopping the accumulation of it. Cut up your credit cards and throw them away. When you only have your debit card to use, you’re much more likely to live within your means.
- Snowball Your Debt
There’s a popular strategy for debt repayment called the debt snowball method. Essentially, you’ll continue making all your minimum payments on your debts. Start by trying to pay off the smallest debt. If possible, you’ll increase your minimum payments to pay that balance off faster.
Once the smallest debt is paid, you’ll apply what you were paying on your smallest debt to the next smallest debt until that one is paid. Continue this method without decreasing your debt repayment budget until all your debts are met.
- Avalanche Your Debt
If the snowball method doesn’t work for you, try the debt avalanche method. Here, you’ll target your largest debts with the highest interest rates first. You’ll try to put in extra payments from your Christmas bonus and tax returns whenever possible. It’s focused on eliminating high interest charges and paying off debt quickly.
It’s technically the shortest way to pay off your debts with the least interest charges. If you can manage the extra payments now and again, the debt avalanche method can quickly help you take charge of what you owe.