Lowering debt can provide a measure of peace and, in the long run, paying down balances increases FICO credit scores. There are several tips for dealing with too much debt. Some people ignore their debt and continue to accumulate balances. Smart consumers, however, understand the importance of careful debt management and keeping debt low.
Personal Sacrifices
Not everyone has extra income to pay down balances quickly, which is one reason consumer debt can linger for years. Getting serious about eliminating your debt and reducing your balances may call for personal sacrifices. This can include a sacrifice of your free time as you take additional employment to help reduce debt. You also may sacrifice shopping and dining out in an effort to reduce your expenditures and put more money toward paying down your balances.
Consolidation
Consolidation can help manage your consumer debt better, and with a lower interest rate on your debts, you can possibly pay less interest every month and bring down principal balances faster. Methods of consolidation include credit card balance transfer offers, debt consolidation loans or working with a credit or debt counselor that consolidates all your accounts into a single bill.
Use Less Credit
An accumulation of debt only worsens as you continue to use credit cards to purchase items. Stopping credit card use helps you eliminate and manage your debt. Thus, you're able to pay down balances without re-accumulating charges, which is counterproductive to progress. Carry cash in your purse or wallet, or save for items instead of using credit for instant gratification.
Debt Payments
Timely payments help with debt management because you avoid interest rate increases and late fees, which are typical with late or missed payments. To help reduce the amount of interest you pay on the account, ask your creditor to reduce your rate either temporarily or permanently; or start making half payments every two weeks instead of once of month. Bi-weekly payments reduce the amount of interest charged by your creditor and helps lower your balance quicker.
Modify Lifestyle
Depending on the amount of debt you owe, managing excessive balances might call for a complete lifestyle overhaul. Living way beyond your means can contribute to debt problems because there isn't enough income to pay your living expenses. Assess how much you spend on housing and transportation, and look into ways of cutting these expenses to save money each month and pay down debt. Move into a cheaper home or apartment, or trade-in your automobile to save money on the monthly payments. Saving $500 a month with a lifestyle change could possibly pay off $15,000 in credit card bills in approximately 30 months.
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