5 ways to say goodbye to debt forever
If your debt keeps you awake at night, it’s time to make a plan to eliminate it. Don’t spend your time blaming yourself for having debt – 80% of Americans do. As long as you take the necessary steps to work at it, you are doing the right thing. However, eliminating debt is not just about paying it down. You need to make a determined effort to control spending so that you don’t start the cycle of debt again. Here are some tips for paying off debt and restructuring your spending in the future.
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Always try to pay more than the minimum payment
If the minimum payment is all you can afford right now, keep paying it. However, if you have room in your budget to pay more, you should. The recommended amount is 15 percent of your salary. This will help you save on accrued interest charges and pay off your debt much faster.
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Ask for a lower interest rate
It might sound like a far-fetched request, but you really don’t know if creditors will say yes until you ask the question. Call your credit card company and explain the situation, especially if you find yourself unable to pay more than the monthly payment requirement. If you’ve made your payments on time, sometimes creditors are willing to negotiate a lower rate, which will make paying off your card much easier and faster.
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Make a balance transfer
If you can’t make more than the minimum payment and your creditor has refused to lower the interest rate, this is your best bet. Credit cards with balance transfer allow you to pay off your balance without interest for a specified period (usually one year). However, there is sometimes an upfront charge. After that, the interest is often higher than average, so only choose this option if you think you can pay off your balance within a year.
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Track your spending
Once you have a plan to pay off your debt, it is imperative that you monitor your spending closely so that you don’t become dependent on credit cards. Track all your spending for a month and see exactly where your money is going. You can do this in a spreadsheet or by using a free budget tracker app like Mint. You might be surprised once you have all the shopping and bill in front of you how much you spend on certain things. Evaluate where you can make cuts so you don’t overspend. After tracking your spending for a month, budget yourself or use an automated budget from an app and stick to it as best you can.
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Get help from a pro
There is absolutely no shame in admitting that you need more financial advice. The National Foundation for Credit Counseling is a nonprofit organization specializing in helping people get out of debt through personalized counseling sessions. They can help you budget, transfer debt, and offer many other resources. Although there is a certain cost for the services (between $ 25 and $ 75 per month depending on the agency, the amount of debt and the regulations in your state) it is nominal compared to the interest your card generates per month.
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Last updated: October 11, 2021
This article originally appeared on GOBankingRates.com: 5 Ways To Say Goodbye To Debt Forever