The majority of us usually have some type of debt, some money owing which is most likely to a financial institution, a parent or a friend. Some may even have significant debt owing which can loom over their heads like an anchor.
Owing money has proven to be one of the bigger stresses in our lives, and as a result, the faster that you begin paying it off, preferably sooner than later, the better off you will be.
Debt is the result of indulging in one of the easier seductions of life which is carelessly spending credit. Once you’re extended any type of credit, such as a credit card, it becomes extremely easy to ramp up the bills, and then becomes a painful burden to pay it off while your credit rating takes a beating.
So having any type of debt feels like an heavy weight which ties you down, resulting in you wanting to pay it off as soon as possible. Fortunately, there are some tips as advised by the top financial advisers and credit counselors, on how you can develop a plan on reducing the money owed.
Consolidating All Of Your Debt Into A Single Line Of Credit
By taking advantage of a line of credit, you can consolidate all of your outstanding credit card debt along with any other money owed, and then combine them into one tidy monthly sum which usually has a lower interest rate.
Once you place your debt owing into this line of credit, make sure that you set out a plan to pay it off as soon as possible. Never begin racking up additional debt since your original credit cards now have a zero balance.
Instead, just keep them active for emergencies and consider leaving them at home instead of packing it around in your wallet. This way, you can then resist any impulse buying at the mall.
Putting Your Debt In The Lowest Interest Rate
Take a closer look at your current credit cards if you have more than one, and see how much (high) their interest rates are. Begin by paying off the one’s which have the highest interest rates first.
If you do have multiple credit cards, know which one’s have the lowest interest rates, and then pay just the minimum required, while paying off the higher interest rate cards off as much as possible.
Also, try transferring your higher interest rate credit card debt into your lower rate cards if possible. At times, there’s a fee for doing the transfer. Do some number crunching to decide whether making the consolidation is worthwhile.
Managing Excess Cash
You may suddenly find some excess cash if your parents or relatives happens to give you money for your birthday, for instance, or you get a cash bonus from work, you have a garage sale to rid of excess junk, or you cash in all of your accumulated coins.
Make sure that you place this new found money towards your debt owing and don’t go spend it. Since it’s money which you weren’t expecting to have, the first instinct is to go out and have a good time.
This mild windfall won’t usually have any affect on your regular living expenses, but then, if you feel that you’ve recently been deprived a bit of fun, then by all means spend a small portion of this cash on something for yourself.
Always Keep Track Of Your Money
To help you to keep as motivated as possible, always keep a running tally on how much money you owe, and how much the balance is dwindling. It then becomes extremely satisfying just to watch the number shrink, while helping you stay on track and focused.
Automated Bank Account Payments
Some banks will have an online banking feature which allows you to set up an automatic payment schedule for a set amount, which will be paid towards your credit card debt, or your line of credit, once a specific day of the month arrives.
Once you set these payments to be automatically withdrawn, the transactions will then occur without you even realizing it, thus making it more efficient and less painful mentally.
Don’t forget that you have these automatic payments set up, however, and make sure that you budget for it, otherwise, you’ll risk your account balance being overdrawn.
Find Different Ways Of Making More Money
Go through all of your current possessions, and then decide to sell those items which you no longer want, use, or need any longer. There are excellent websites such as Kijiji or Craigslist allowing you to do so, or you can hold a garage sale to sell off all of your items at once.
You may even have some designer goods or collectibles in your closet or garage which you’re wanting to part with. If so, then head down to your local consignment shop and see how much that vintage item can fetch you.
If you have time, consider getting a part-time job or begin freelancing so you can earn some additional cash. Keep in mind that the reason for earning this extra money is for paying off your debt, so make sure that you stay disciplined enough so you won’t go out and buy something that you don’t need.