Today we continue our series on simple solutions to ease your debt load. Last week we went over a series of possible ideas, including saving plans, utilizing budget software (like mint), as well as switching over to credit cards that have lower interest. Today we will be going over other concepts that will help you get out, and stay out, of debt.
#1 DON’T do monthly minimums anymore. Minimum payments are, by nature, designed to keep you in debt for the rest of your life. Instead, you should focus on hitting the debts that have the highest interest rates. You need to pay more than minimums to get out of these killer interest rates.
#2 Consolidation: This piggy backs off the notion of transferring to lower interest rate cards. But it also means consolidating into one lower monthly payment. You will get hit by transfer fees but this might be the best solution to keep in mind. You can also take out new loans potentially, that just have better rates. Then use these to pay off loans that have worse rates.
#3. Make more money. Easier said than done right? In reality, most Americans are underemployed, meaning they could be making more money under different circumstances. This might mean relocating to a higher paying job, working harder, or investing in continuing education and training. Also there are side jobs, second jobs,and investment opportunities. All of these can be great ways to increase your income.
It is important however not to spend your new earnings but focus on paying off your debt. Many people who get a boost of financial resources assume they should be living better, so they start getting further and further into debt. This is a common pattern and should be avoided at all costs.
#4 There’s a time to save and a time to spend. Your goals should include provisions for both of those times. Keep track of your target projections of savings and spendings, and do not go over this projection. The limits will keep you on track longer after you pull out of debt.
#5 More is less. If you savings on low rates in a checking acct. use them towards debt first.
#6 Stick to debt payment. Whatever you decide, stick to it. If you enter in a debt payment program, stick to that. The main thing is to be patient and reap rewards in the long term.
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