If you’re finally tired of the albatross that is your debt load, there are ways to go about alleviating it. After all, you can’t truly move forward in life if you have significant financial obligations, particularly if you’re close to being behind in payments. With that said, here are some tips that can help you reduce your debt and create healthy habits so that you can live more stress free.
Create a Budget
Although many people resist this, thinking it will remove all joy from life, establishing a budget that makes room for “wants” as well as needs assures that you always have enough to pay for what’s important to you. A budget helps you keep track of how much you’re earning and spending, and what you’re doling out cash on. Staying atop of what you’re bringing in and spending on can help you get rid of or lower unnecessary costs.
Avoid Unnecessary Purchases
Before adding any new debt, focus on paring your current obligations. This means cutting out most unnecessary purchases while budgeting some monthly funds for low-cost outings with friends or other things you enjoy. Just don’t go overboard and make managing your debt more challenging.
Be Prompt with Bill Paying
The last thing you need when trying to pay down debt are missed bill payments, especially on high-interest credit cards. Not only will you rack up late fees, but you’ll damage your credit, which will get you into worse trouble. Ideally, you want to pay your bills in full. If you can’t, try to submit more than the minimum so that you don’t have to pay more in interest and fees.
Examine Your bills for Errors or Other Issues
When many people get bills and statements, they focus almost exclusively on how much they owe and may not even look at their statements. But really, you should always look closely at these documents, checking for errors or any rate hikes that seem amiss. Contact your lender with any questions.
Prioritize High-Interest Debts
If you have multiple bills owing, going after the obligations with the highest interest rates and fees will lower how much you owe over the long haul. You’ll usually save the most cash by paying off high-interest debt – think credit cards – as quickly as possible. The fact is that the longer a balance accrues interest, the more you’ll ultimately pay. Compound interest makes the situation worse because in addition to existing accrued monthly interest, you’ll have to pay interest charges. If you need help with credit card debt, contact Freedom Debt Relief.
Lose Some of the Credit Cards
If you’re having trouble managing your debt, then you may need to limit the number of credit cards you have to one or two low-interest ones. Besides, there’s no harm in reducing temptation to spend money you don’t have. But mainly, you don’t want to have to keep track of, and be responsible for, annual fees and monthly payment due dates. Twenty percent of American adults have no credit cards, but the downside is the challenge of building a credit score.
Consolidate Your Debts
You’ll need good credit to get a good rate, but if you have multiple debts you may want to consider taking out a consolidation loan from a bank or credit union. This strategy involves rolling your debts into a single monthly payment, which streamlines bill paying, helps you pay your debt faster, and can save you money in the long run. In lieu of a consolidation loan, you can apply for a 0% interest balance-transfer card. You can shift your high-interest credit card balances onto this card and pay it off during the promotional period. You will need good or excellent credit to qualify, however.
If you take these tips to reduce your debt to heart, it won’t be long before you’re back on solid financial ground. Incorporate the ones that suit you best. If your problems are worse than what you can handle alone, we suggest you contact Freedom Debt Relief, which has helped scores of people over the years regain their financial footing.
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