4 Ways to Start Managing Your Debt Today
While not all debt is bad, you don’t want to owe money to another person or entity if you can help it. Therefore, it may be a good idea to review your current debt situation and make a plan to pay it off as soon as possible. What are some ways to help you manage and pay off any balances that you currently owe?
Attempt to Refinance Your Debt
Refinancing your current loans can help you reduce your interest rate while combining your debts into one monthly payment. For instance, you may want to consider transferring your credit card balances to a single card with 0 percent interest. You may also attempt to refinance your mortgage or car loans if you can get a lower interest rate or other favorable terms.
Talk to Creditors About a Debt Settlement
If you have money in the bank, it may be possible to settle a large debt with one payment today. A creditor may accept pennies on the dollar of what you owe if you can show that you won’t be able to make future payments because of a job loss or other negative circumstances in your life. In addition to helping you save money, it could help you maintain a relatively positive credit score and history.
Decide Whether to Use the Snowball or Avalanche Method
The best way to pay off debt is the way that works best for your personality and philosophy for managing money. If you need to see immediate results to keep you motivated to pay off your debt, you should target the debts with the smallest balances. However, if you are interested in spending as little money as possible while paying off your debt, you should target the debts with the highest interest rates. This may be better in the long run even if it takes longer to start seeing results.
Stop Using Your Credit Cards and Cut Back on Internet Spending
Research has shown that those who use cash to pay bills and other expenses tend to spend less and save more. Therefore, you may want to put away the credit card and shop in stores instead of spending money online. If you have to do your shopping online, try to do so with a prepaid card. This forces you to spend cash while also limiting how much you can spend at any given time.
If you are finding it difficult to keep up with your debt or simply want to pay it off faster, you are not alone. The good news is that there are many ways in which you can help to manage how much you or reduce your debt balances to restore a sense of control over your finances.