Debt Help: Paying Off Your Debt
MySpendingPlan.com Editorial Staff
If you total all the
outstanding debts of every American, the amount runs into trillions of
dollars! This just goes to show that majority of Americans are under
debt and need some kind of debt help. Well, if you too find yourself in
need of debt reduction assistance, the following tips will definitely
help you to pay off your debt.
Tips for Paying Off Debt
- First and foremost, stop
adding to your debt. Cut up all your credit cards and only buy
those items that you can pay cash for. No exceptions at all. You
may keep one credit card for emergencies, but make sure it is the
one with the lowest interest rate. Then hide this card where you
can’t get at it easily.
- Keep credit card accounts
you have paid off open, just do not use them! Your credit score
reflects total available credit vs. outstanding balances. The more
your available unused credit, the higher your credit score.
- Transfer all your credit
card debt to one card, that which has the lowest interest rate. If
possible, look for zero balance transfer offers that will help to
reduce your debt significantly. But remember, leave those paid off
accounts open and just do not use them.
- Pay off those debts which
have the highest interest rates first. This may take a long time
but with determination, you will eventually be able to be debt
free. However, if you are not quite so disciplined or able just
yet, you may want to start with those debts that are small, even if
they have the lower interest rates. Such debts will be paid off
faster, thus giving you the confidence of tackling the bigger ones.
- Use personal budgeting
software and create a budget for yourself. List down only the most
essential expenses and cut down drastically on entertainment and
eating out. Rent a DVD instead of going to the movies. Make your
own pizza instead of picking up the phone and calling Pizza Hut.
Make dinners for the entire week and freeze them. This way you can
buy groceries in bulk and save a lot of money. All this saved money
should go towards paying off your debt. Make a budget and stick to
it even when the going gets tough.
- If you have any
investments or savings, use those to pay off your high interest
debt. Interest rates on credit cards and other loans can be as high
as 12% to 22%. No savings account, fixed deposit, or investment
account is going to pay you that kind of guaranteed interest. So it
just does not make sense to pay really high interest rates and let
your savings accumulate at much lower rates.
- Contact your creditors
and ask them to reach a settlement or at least lower your interest
rate. You will be amazed at how much of your debt the lenders are
willing to lessen just so that you do not go into the bad debt
category on the entire amount.
- Always pay more than the
minimum balance due. Credit card minimum payments have already
risen a lot due to new rules passed by the government, which is good
news because you’ll be able to pay off your debts sooner. However,
you must pay more than the minimum balance due if you ever want to
be debt free.
By using these debt reduction
tips and creating a proper payment plan, you can steadily, but surely,
be debt free.