We all know that the quicker we can get out of debt, the more money we will have at the end of each month. Unfortunately, paying off debt can be tough. The good news is that you can pick any or all of these money saving tips to help conquer your debt once and for all.
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. Not to mention that instead of having several bills to pay each month, you’ll have only one. It’ll make organization that much easier if you have only one single bill to look at each month. It will also be better for your mental health to hold only one vs. three or four.
2. Call your creditors – Another great option for saving money is to call your creditors and ask that they 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. As money saving tips go, this is both a long-term and short-term solution.
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 even 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. This first 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 pay. 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 quickly, so make a choice based on your specific bills and what you owe.
If you have a lot of debt, it pays to do whatever you can to save money. Whether it is consolidating your debt or paying off your small balances first, you CAN save money by paying off your debt. 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 read about how to avoid household budget mistakes to keep yourself moving forward on the right financial road.