Cornering yourself into mounting debt problems may cause you sleepless nights. Especially if banks and credit card companies call you every now and then to remind you of your due and late payments, that would be surely a big pain in the butt.
However, you can’t just spend your nights thinking of how your debts are getting bigger and the interests soaring higher. You need to think of effective ways to solve your problem. Now, there are several ways to pay off debt. You just need to follow these several proven tips that will allow you to pay off your debt as quickly and easily as possible.
1) Pay your debts monthly and if possible, higher than the minimum amount due.
When you pay only a minimum amount, the tendency is you are prolonging the payment and you are making the banks happier. They will be getting more money from you since you will be paying only a minimal percentage from the balance. The result is you will be extending more time in the payment of interest.
2) Pay more on the debt with the highest interest, and pay a minimum with those that have a lower interest.
This is also what they call the snowballing method. Using this method means that you need to prioritize your payments to debts with the highest interest. Let us take a common debt problem, credit card debts. If you have US $900, instead of paying US $300 to each of your three credit card debts, you only need to give the minimum amount due to those two cards with lesser interest rate like US $200 each. Through this, you can pay US $500 to the debt with the highest interest thereby allowing you to pay your debts much faster. This will let you get rid of the debt that charges more interest and enable you to pay all your debts quicker. Snowballing method is definitely one great way on how to pay off debt easier.
3) Make use of your savings account to pay off your debt.
Another effective way of debt reduction is by using your savings. It would be very bizarre to be earning approximately 3% interest from your savings account, and yet you are paying around 18% interest on your due and demandable debts. It would be better to make use of your savings to pay off your debts rather than placing your money on the bank with such a minimal profit. With your situation, you must give more importance to those matters that have more weight from those that are less significant. Since you need to pay your debts quickly, you need to make some sacrifices and one of which is by taking money from your savings account. Anyway, by the time you are free from your debts, you can always start saving again.
Being in the middle of this dilemma might not be easy. However, if you know the smart ways to pay off debt, that is prioritizing your payment to debts that have higher interest rates, then you will surely have an easier time in resolving your debt problems.
Posts
0 Comments