Debt elimination efforts can fail without a solid plan. Debt can accumulate from overspending, job loss, medical problems or poor budgeting. You may solve your debt problems, and ultimately improve your personal finances. With fewer debts, there's more cash for savings.
Ditch Credit Cards
Remove every credit card from your wallet and place these cards in a safe place. Keeping credit cards out of easy reach can reduce the temptation to spend. And by only carrying cash in your wallet, you avoid overspending and accumulating additional charges. Start by placing these cards in a safe or drawer; but if unable to avoid the temptation to use them, cut them up. Do not close the credit card account. Doing so can decrease your credit history and lower your FICO score.
Monthly Payments
Reduce spending and use the savings to increase your monthly payments. Paying only the minimum on your credit cards will not reduce the debt fast. Instead, you'll pay a lot of money in interest charges. Increase payments slowly by doubling your minimum first, and then continually increasing payments as your budget allows. If you have an extra few hundred dollars a month, use this extra income to pay down credit cards and smaller installment loans.
Part-time Work
Reducing debt may require generating income apart from your regular full-time employment. Take a part-time job on the weekends or evenings, and use all your earnings for debt payments. Even earning as little as $100 a week increases your monthly earnings by at least $400 a month. This extra cash can pay down a $4,000 credit card balance in approximately 10 months.
Better Rates
Contact your credit card companies to see if they will reduce the present interest rate on your accounts. Benefits to paying a cheaper rate include fewer interest charges each month, and your monthly payments will reduce the principal quicker. Getting a better rate depends on your payment habits. For this reason, it's imperative to pay your creditors on time each month.
Home Equity
If you are financing a home, take advantage of the equity in your home to pay off or reduce your debt. Home equity loans and home equity lines of credit allow you to tap into your home's equity and acquire cash to pay off outstanding balances. Discuss equity options with a mortgage lender to learn how these types of loans work. Make sure you can afford the monthly payment. There's a risk of foreclosure if you default on a home equity loan.
0 comments:
Post a Comment