5 Helpful Tips for Getting Out of Debt
- Understanding your debt. First and foremost, take some time to review your situation and get a strong grasp on your debt. Focus on paying off the loans with the highest interest rates first. These are usually credit cards. Student loans can be a scary word for most but repayment is obtainable. Evaluate if it would be a good idea to consolidate them into one easy payment with a similar or lower rate. Keep in mind that government loans allow for benefits that private loans may not.
- Pay more than the minimum. You may have heard this many times, but it can be hard to pay more than the minimum if you didn’t budget for it. If you don’t, you’ll struggle to get a strong financial footing and end up costing yourself more in the long run. For example, if you pay the 2% minimum ($100) on your $5,000 credit card with an interest rate of 17%, it will take you over 7 years to pay off and cost you $3,759 in interest.
- Become a saver, not a consumer. Debt makes it easy to think you have money and when you have extra money in your account, you want to spend it. Stop, drop that item and roll that extra cash into eliminating your debt. Be sure to not only cut your debt down but also avoid additional debt.
- Put in the extra effort. There is no time like the present to make a big dent in your debt. An easy way to do this is by earning extra cash with a side job. (Use the Accelerated Debt Payoff Calculator and find out how much you need.) Consider using your talents to bring in extra money. Sacrificing some of your free time could knock out your debt completely.
- Setting goals are a must for financial success. Use those goals to help your spending decisions. Get in the habit of asking yourself if each purchase will help you with your goal of defeating debt. There are many ways to get out of debt, find what works for you and stick to it. “The secret of getting ahead is getting started.” Mark Twain
If you are ready to start your journey of getting out of debt, then these 5 tips should help you get started. Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for free Financial Wellness Wednesdays Seminars.