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Quick Tips For Paying Down Debt
Lowering consumer debt can be a great way to raise your credit score, cut down on financial stress, and put you on track for a more financially fit future. However, it can also be challenging to do with rising costs, limited funds, and sometimes overwhelming interest costs. Despite the hurdles, anyone can start paying down and reducing consumer debt with a little patience and diligence. Here are some easy ways to start lowering your debt today.
1. Talk to Your Credit Company or Lender
If you are struggling with your debt payments, talk to your financial institution. They may be able to help you set up a payment plan, reduce your interest rate, or have other options available to assist you.
2. Consolidate Your Payments
Do some research and see if you can consolidate your credit cards into one lower monthly payment through a debt consolidation loan. Debt consolidation loans can stretch out the amount of time you have to pay and/or give you a lower interest rate overall. Just make sure that you don’t incur more credit card debt on any cards you pay off with the consolidation loan.
You can also use a Home Equity Line of Credit as a way to consolidate your higher interest loans into a lower interest, single-payment alternative. See this blog on how you can use home equity to build a better future.
3. Cut Yourself Off
Even if you have more available credit, you don’t have to use it. Commit to not using your credit card until you have paid a certain amount off. Remove the card from your online accounts and take it out of your wallet. If you don’t have access to it, you can’t use it.
4. Make More Than the Minimum Payment
By only making the minimum each month, the interest charges will keep adding up long after your purchase. Instead, try to pay the minimum payment plus the monthly interest amount (or more). If you can only make the minimum payment by the due date, you can always make additional payments later in the month, which may also help your credit score as a bonus when paying down debt!
5. Free Up Extra Money
The best way to get rid of debt quickly is to pay it off quickly. The longer it takes, the more you will end up spending on interest charges. You may need to cut out extra spending in your budget for a few months, take on a second job or a side gig, or even sell items from around your house. Whatever you can do to find extra cash to put towards your debt will help you in the long run.
6. Find 0% APR Offers
If interest charges are killing your debt repayment, shop around for incentives, and lower APR offers. Many financial institutions have 0% offers for new balance transfers for a certain amount of time. Be aware of how long the 0% rate will last – if you don’t pay off your balance within that time period, you may have to pay the interest that would have accrued during the promotional period. By transferring a balance (or two) to a lower APR card, you can pay more per month towards the principal balance.
7. Get Help
Talking to a financial expert (we have free and confidential financial coaching for members) can help you prioritize your debt payments and fix your budget to help you make those monthly payments. Many financial institutions offer free advice and essential financial planning services. There are also low-cost resources online or resources for low-income individuals in the community.
Finally, the best tip is to set up healthy spending and saving habits to keep from using consumer debt. If you have savings established, you will be less likely to need to use a credit card in case of an emergency or unexpected expense. Stick to a healthy budget, and you will have more money to set aside for savings (and your debt payments). No matter your financial situation, tackling your debt can start small, but lead to significant results.
