Expensive minimum payments, high interest rates and a lower credit rating are all consequences of debt problems. Paying off debt helps fix a bad financial situation. But if you don't have a lot of extra money in the bank, employing creative methods can help get rid of the debt faster.
Saving Up for Purchases
Credit cards eliminate the need to plan for purchases. You can simply whip out your plastic and buy anything you want. However, impulsive shopping and high debts go hand-in-hand. Solving debt problems will require restraint and a little self-denial. Rather than use credit as a means to satisfy your wants, put away your credit cards and use cash for purchases.
Knocking Down Interest Rates
Get rid of your principal balance on credit cards faster by asking for a lower interest rate. Some credit cards have high interest rates -- perhaps 20 percent or more. With high rates, a large percentage of your payments go to paying off the interest charged during the previous month. Ask creditors to slash your rates, or consider transferring the balance to a low-interest rate credit card.
Minimum Payments
Some people are comfortable paying only the minimum on credit cards each month. These small payments may not impact their personal finances. But if you are serius about solving debt problems, minimum payments are not enough. Higher payments are key to eliminating debt fast. Send triple the asking minimum each month, or use funds from tax returns or bonuses to pay down debt.
Home Equity
Pulling money out of your home's equity and using this money helps eliminate high interest debt. Home equity options include a loan or line of credit using the equity as collateral, or refinancing the mortgage loan with a cash-out option. Equity options do not necessarily get rid of the debt. Instead, equity options provide a means of consolidating debts at a lower interest rate. Because consolidating tends to result in a better interest rate, it's possible to pay off your debt sooner.
Get Creative
You don't have to rely on your present income alone to solve debt problems. Often, paying off your balances calls for earning income in addition to your regular employment. It's tiresome working two jobs to pay off your debt balances; however, debt-free living is well worth the sacrifice. Stay focused on the end results and create a plan. If you owe $3,000 in credit card debt, resolve to earn an additional $500 a month to pay off the debt is six months. That breaks down to $125 a week.
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