10 Smart Ways To Pay Off A Huge Debt. The year is almost coming to an end, and one must get their finances in check. You would want to start 2019 with fewer financial problems, and possibly debt free. The following tips will help you deal with that debt that has been giving you a headache all year round.
1. List All Your Debts
This includes the creditor, total amount of the debt, monthly payment, and due date. You can use your credit report to confirm the debts on your list. Having all the debts in front of you will allow you to see the bigger picture and stay aware of your complete debt picture
2. Create A Budget
A budget will help you make better decisions about your money and give you an idea of how much you can afford to put toward your debt each month. Don’t try to manage your expenses in your head; seeing the numbers on paper lets you see the bigger picture without having to rely on your memory. Your budget can also help you see where you might be able to free up money that you can put towards your debt.
3. Put Together A Plan
Paying off your debt should always start with a plan. Prioritize your accounts, noting the order you want to pay them off, e.g. highest interest rate debt first, lowest balance first, or another order. The plan is to pay as much as you can afford on one account while paying the minimum on all the other accounts. Ideally, you’ll find ways to free up more cash in your budget.
4. Make At Least The Minimum Payment
If you can’t afford to pay anything more, at least make the minimum payment. Of course, the minimum payment doesn’t help you make real progress in paying off your debt. But, it keeps your debt from growing and keeps your account in good standing. When you miss payments, it gets harder to catch up and eventually your accounts could go into default.
5. Stop Creating Debt
Cut up your credit cards and don’t apply for any more loans so you don’t have the ability to create additional debt. You’ll never get out of debt if you’re continually adding to your balances. Creating additional debt also increases the payments you have to make, which creates additional strain on your monthly income. It’s tough to live without credit cards when you’re broke, but if you’re serious about getting out of debt, it’s critical that you find a way to live on your income.
6. Cut Your Expenses
Don’t guess about it. Review your monthly bank statements to see what you’re spending money on each month. For each purchase, ask yourself seriously whether this is an expense to get rid of. Remember, you’re not cutting costs just for no reason at all. You’re doing it so you can get out of debt. It’s a worthy goal. You may have to make some temporary sacrifices, but you can add expenses back after you’re debt-free if you decide those expenses are worth it.
7. Increase Your Income
Making more money accomplishes two goals. First, you’ll no longer have to rely on your credit cards to make ends meet and you’ll be able to live within your means. Second, you’ll have more money available to put towards your debt. You can increase your income by taking on a second job, doing freelance work, selling things on eBay or Craigslist, making money from a hobby, doing odd jobs or starting a small business.
8. Pay On Time
Late payments slow down your debt pay off progress. You’ll have to double up on payments next month plus pay a late fee, money that could have reduced your balance. Plus, two late credit card payments in a row will trigger the penalty rate, which will also make it tougher to pay down your debt.
9. Take It One Step At A Time
Looking at your total debt picture can be overwhelming, but remember that you’re not going to tackle it all at once. By concentrating on one debt at a time, your debt repayment is more effective. Track your progress, celebrate your successes, and keep chipping away until your debt is completely paid off.
10. Recognize The Signs That You Need Help
If you find it hard to pay your debt and other bills each month, you may need to get help from a debt relief company, like a credit counseling agency. Other options for debt relief are debt consolidation, debt settlement, and bankruptcy. These all have advantages and disadvantages so weigh your options carefully.
