If you’re like most Americans, you have a few thousand dollars in unsecured and credit card debt that you carry around each month. Statistics indicate that of Americans who have unsecured debt, the average amount of that debt is about $16,000. If you’re carrying debt, you probably dream of a way to pay it in full – preferably a way to pay it off a lot faster than you ever thought you could. Believe it or not, there are ways to do just that. Here are four powerful tips to get you started.
- Focus on one debt first. Throw any spare cash you have at one debt to see some meaningful progress on that account. To get the most financial benefit, choose the account that has the highest interest rate first. To see progress more quickly, choose the account with the lowest balance.
- Double up. If you can only make monthly payments, try to make a double payment or another partial payment on at least one account each month. Even small amounts can help chip away at your balance over time.
- Take a part-time job. Both of the previous methods require you to pay the minimum required on all your accounts, so unless you have any spare money available – and many people don’t – to increase payments or pay extra, you may need to find a side job to help jumpstart your debt repayment plan.
- Register for debt consolidation help. Especially when debts are very big, the first three options can still mean you’ll be paying your debts back for years. To see real progress, you need to reduce the amount you’re paying, and debt consolidation can help you do just that. Debt counseling experts are skilled at working with creditors to slash interest rates and get rid of fees that add up when payments are late or accounts are overdrawn. When monthly payments are reduced, it can be a lot easier to make some real progress in paying back debts. Debt consolidation counseling does not involve taking out additional loans. Programs that advocate taking out additional loans to pay back existing debts are often a quick way to get into even more debt, and they also can involve exorbitant fees themselves, so avoid debt loans at all costs.
Carrying debt can lower your credit score, making it difficult to get a home or car loan, insurance or even a job. Miss a payment and your interest rate may soar. Go over your limit or make a late payment and the fees and penalties can be hefty. What’s more, many studies have shown that carrying debt can cause stress levels to rise significantly, and that can have a direct effect on your health. Credit management and debt consolidation are simple ways to get your debt under control and get it paid back quickly. Today, there are lots of options to improve your financial savvy and reduce debt, so take some time right now to make paying your debt a priority.