Best Ways To Pay Off Debt
We all know that the quicker we are paying off debt, the more money we will have at the end of each month. Unfortunately, getting out of debt can be tough.
The good news is that there are things you can do. You are in charge of your actions, so let’s get to it.
1. Consolidate – The easiest thing that you can do to save money while paying off debt is to consolidate your debt. The key is to find a low or no-interest way to consolidate.
For example, you might have a credit card that has 0% interest on cash advances for 18 months. If you have credit cards (like most of us do) with 18% interest or higher, you have the option to immediately save a ton of money if you take a cash advance on the 0% interest card to pay off the higher interest cards.
This would allow you to have a single bill to pay each month instead of a bunch of smaller ones. It’ll make organization that much easier. Plus, looking at a single bill instead of multiple will be better for your mental health.
2. Call your creditors – Another great option for saving money is to call your creditors and ask if they can lower your interest rates. If you’ve been paying your bills on time and have been a customer for years, you may be able to lower your rate by a few percentage points.
You may need to be persistent and ask to speak with a manager to get the best drop possible. It can be intimidating to make this call, but be polite, explain yourself and if the person you are speaking to can’t help you, ask for their supervisor. Keep asking for supervisors until you are able to get a discount. The squeaky wheel gets the grease! As money saving tips go, this is both a long-term and short-term solution – and as confidence boosters go, this is a great one when you accomplish it!
3. Transfer debt – If you are not crazy about consolidating all of your debt into one loan or credit card, think about transferring the balances of your high-interest cards to a low interest-card.
You may be able to find a credit card offer that allows for 0% interest on balance transfers. This can save you thousands in the long-run and again, our stress levels go down when we are holding less bills (even if the balance is the same).
4. Snowball – There are two methods for paying off debt when you continue to have several bills to be paid off. This first method (the snowball method) suggests that you pay off small balances first so that you have more money to put towards your other debt. This saves money because you’ll pay your debt off faster when you keep paying off a new balance every few months. It makes you feel as if you’ve accomplished paying off debt little by little and can give you better peace of mind.
5. Pay off high-interest debt – The second suggested method for paying off debt is to pay off high-interest debt first. This saves you money by cutting the amount of interest you will end up paying.
The largest downside to this option is that you will continue to have several payments each month rather than paying off balances more quickly. That said, the interest can rack up very swifly, so make a choice based on your specific bills and what you owe, which is why consolidating everything to one card may be a better long-term option.
If you have a lot of debt, it is worth doing whatever you can to save money. Giving in and giving up is never the answer. Life will go on and you don’t want this to be a constant hindrance.
Hopefully these money saving tips will give you some direction and have you paying off debt sooner than you thought you would be able to. Be sure to also read about how to avoid household budget mistakes to keep yourself moving forward on the right financial road.
Leviticus Bennett says
I agree with you that interest should be avoided. Like you mentioned, you can transfer debt to cards with lower interest or focus on paying off high-interest debt first. It’s also a good idea to watch your credit score so that you can qualify for lower interest rates.
Ken Hwan says
I found it very surprising that it is possible to convince your creditor to lower your interest rates, especially if you have been paying off your bills consistently and without any issues. My wife and I recently had a baby, and we are trying to keep ourselves out of debt with all of the new child expenses. I will be sure to show my wife this article and let her know that we should try to contact our creditors as soon as possible!