Debt is a creature that grows and feeds upon problems like unemployment, unexpected expenses, and bad financial decisions. Getting out of debt after having fallen into the trap of credit cards, short-term loans, and other pricey debts is very difficult these days. Getting out of debt fast takes some ingenuity and determination in sticking to a debt payment plan, but the process isn’t an impossible one.
Making sure that each bill is paid on time each month is something everyone should do without having to make a plan, but paying down debts in a timely manner does take some additional planning. A helpful activity is to make a list of each interest rate on every monthly payment and choose the debt with the highest interest payment to focus on first for elimination. In the long run, this strategy should result in the lowest overall amount paid on debts.
2. Use savings to pay off high interest debt
Although everyone needs to have some savings in the bank, it’s important to make sure that an individual isn’t paying more in interest each month than he is saving. As long as there is a plan to rebuild savings after using that money, it’s appropriate to consider using some of it to pay off a debt that’s costing an arm and a leg for interest each month.
3. Pay a little more each month
Paying the minimum balance on a credit card might be all a person can do to stay out of trouble with a credit card company, but paying just a small amount more each month on a card will reduce the balance quickly. Credit card profits thrive on individuals paying the minimum each month. Paying twice the minimum on at least one card is a good start in attacking debt and making it disappear.
4. Borrow against life insurance
Some types of life insurance have a cash value associated with the policy, and it’s possible to borrow against that policy. Insurance provides some valuable options for paying off debt. To check for insurance rates and quotes visit homeownersinsurance-quotes.org. Alternatively, using a home equity line of credit might also represent savings in the long run if the fees and interest charged with the home equity loan are lower than what would be paid on credit cards or other types of loans.
5. Enlist family or friends
Asking a friend or family member for money might feel difficult, but there are some types of arrangements that can be made that will save a person a lot of money and also provide the opportunity to get out of debt faster. A family member with the means to offer a loan could charge just a few percent in interest (or zero interest, if they were generous), which would mean huge savings for someone who might have been paying 30 percent interest on a credit card.
Getting out of debt fast takes planning and perseverance, but it’s not impossible to accomplish on modest budgets. Utilizing a variety of the preceding opportunities offers the greatest potential for paying off debt much more quickly than credit card companies would imagine possible. The key to getting things paid off sooner means paying close attention to interest rates, and moving things around accordingly to enjoy less money paid before debts are fully extinguished.