It is often easy for us to fall into debt, but it is definitely a lot harder to get out of it. Some people may take decades to pay off any debt that they accumulated in a matter of months. Luckily, there are many tricks and strategies that you can do to eradicate your debt.
Here are five ideas you can try to eliminate debt.
Stop Making More Debt
This may seem like an obvious tip, but stop creating more debt if you want to eliminate it. You should cut or freeze your credit cards for the time being until you get a lot of debt out of the way. If you cannot freeze or cut your credit cards, try to make it a habit to carry cash with you instead of cards. That way, you will be less tempted to spend money since you can see how much money you physically have. You can also put yourself on a strict budget to make sure you do not unnecessarily spend.
Increase Monthly Payments
One reason people take years to pay off their debt is that they are only paying for the minimum monthly payment. If you do that, it will not only take longer, but it will also potentially make you pay double of what you owe because of the interest rate.
If you use a debt-strategy to eliminate debt, then it may be fine to pay the minimum amount for certain debt. However, throw more cash towards your debt every month if you want to get rid of it fast.
Ask for a Lower Interest Rate
A lot of your debt payments may go to your interest rate rather than the actual amount because of high-interest rates. Luckily, you may be surprised to find out that you can ask your creditor to decrease your interest rate. If you have an impressive payment history, you can get a lower rate. It will help you eliminate your debt quickly while avoiding paying for more than you should.
A consumer proposal is debt consolidation that can help you manage your debt. It is a form of a legally binding agreement that seeks to settle a debt between two parties. It will help you repay the creditors as part of what you owe to get your full debt forgiven. Find a company that specializes in consumer proposals in your area to help you decide if it will help you with debt.
The debt snowball method is a popular debt-strategy that many people used to pay off their debt faster. It is a system that helps you pay off multiple debts while making you feel rewarded. The idea is to list all your debts from smallest to biggest and ignore how much the interest rate of each is.
Put more money towards paying off the smallest debt while making the minimum payment for the others. Once you eliminate the smallest debt, use how much you were paying for it (the monthly minimum and extra money) then do it to the next smallest debt and repeat.
Debt is something that many people deal within their lives. You need to find a way to help you pay it off before it piles up. Follow the tips mentioned to get rid of your debt fast.