Whether it be due to loss of a job or just plain overspending, debt levels can easily start increasing, especially when interest charges and fees get tacked on. Fortunately, there are ways to get out from underneath the crushing burden of debt and most approaches, while simple in practice, require discipline and commitment toward the goal of becoming debt-free.
Reduce Spending
The most logical way to reduce your amount of credit card debt is to significantly lower your spending and stop putting new charges on your credit cards. Establish a budget and evaluate your spending patterns to see in which categories you can reduce spending. Switch to a debit card or cash only means of purchasing to keep new debt and interest charges off your credit cards and allocate all savings to paying down your existing balances.
Increase Income
It is easier to devote more funds to paying down debt if you have more money available to do so. Consider getting a second job, freelancing, selling excess items or even asking for a raise at work to generate additional income. Make a commitment to take all additional earnings after taxes to pay down credit card balances.
Lower Interest Rates
High interest rates can lead to charges to significantly inflate your debt far beyond what you originally spent. The problem has been so problematic that legislation was passed requiring creditors to disclose how long it would take to pay off the balance if only the minimum payment was made. In many cases, it could take decades to pay down a balance by only paying the minimum. The culprit? Interest charges. Call your creditors and request lower interest rates or look for creditors offering introductory low rates on balance transfers. Lower rates will allow for more of your payments to pay down principal versus paying interest fees.
Explore Debt Management
Debt management services have become a thriving business and provide many options to debt-laden consumers. Evaluate the various debt management options and determine the best approach for your needs. Debt consolidation loans aggregate all of your debt into a single new loan at a lower interest rate. Credit counseling offers education and works to lower interest rates on your credit cards on your behalf. Debt settlement firms help you settle outstanding balances through a single lump sum payment that is usually much less than the full amount owed. Each approach has its own set of benefits and drawbacks you should consider before arbitrarily enrolling.
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