HOW TO PAY OFF DEBT IN VERY LESS TIME

Here are few tips to pay off debt as fast as possible

HOW TO PAY OFF DEBT IN VERY LESS TIME


1.Target one debt at a time

Do you have any outstanding balances on any other credit cards? If so, make sure you consistently pay the minimum amount due on each card. Then concentrate on reducing the combined balance on each card, one at a time. One of two options exists for selecting the card you want to attack:


Focus on high-interest debt

Find out which credit card has the highest interest rate by looking at the interest rate portion of your accounts, and focus on eliminating that debt first.

OR

Try the snowball method

With the snowball approach, you start by paying off the card with the lowest balance. Once the debt has been fully settled, you use the funds you were using to make that payment to assist in clearing the next-smallest obligation.


2.Pay more than the minimum


Check the statement on your credit card. It takes much longer to pay off your credit card payment if you only pay the minimum balance. You'll pay less interest altogether if you pay more than the minimum. In order for you to understand how this relates to your account, your card company must chart this information out on your statement.


3.Consolidate debt

Debt consolidation enables you to consolidate many balances with higher interest rates into one with a lower rate, allowing you to pay off your debt more quickly without having to make larger payments. Here are two popular methods for debt consolidation:


Transfer balances

Take advantage of a low balance transfer rate to move debt off high-interest cards. Be aware that balance transfer fees are often 3 to 5 percent, but the savings from the lower interest rate may often be greater than the transfer fee. Always factor that in when considering this option.


Tap into your home equity

If you have equity in your home, you may be able to use it to pay down card debt. A home equity line of credit may offer a lower rate than what your cards charge. Be aware that closing costs often apply.

If you do consolidate, keep in mind that it’s important to control your spending to avoid racking up new debt on top of the debt you’ve just consolidated.

4.Review your spending

Start by categorizing your monthly spending, for example: groceries, transportation, housing and entertainment. Your credit card statement can be a helpful tool; many issuers categorize your spending. Look for areas where you can cut back. Then take the money you’ve freed up and apply it to paying down your debt.


Pay with cash

One way to manage your overall debt is to consider purchasing things with cash. Using cash or a debit card can help you avoid overspending or making impulse purchases—plus you eliminate any extra fees that may apply when paying with plastic. You’ll also have a clear understanding of how much is going out vs. coming in every week or month.


Use financial windfalls

Commit raises, bonuses or other financial windfalls to debt reduction rather than adding these funds to your monthly spending pool. Using this “extra” money to chip away at your debt can help you reach repayment goals faster.


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