Debt has become a way of life for most people. Take a look at stats released in 2015 that show the typical American household has $7,281 worth of credit card debt. Then there are the college graduates who leave school with $35,000 worth of student loan personal debt. People are taking on large amounts of debt and it can be hard to see a way out.
If you’re the type that doesn’t like debt hanging over your head and prefer to pay it off sooner rather than later, then you may be looking for ways to help make this happen. Whether you have a sizable personal debt or just a small loan you need to pay back, these are tips you can use that will help you clear your debt and have a fresh clean slate once again.
Paying the Minimum Won’t Get You Out of Personal Debt
The first thing you’ll want to do is stop paying just the minimum on your debt. This goes for credit cards, loans, and anything you owe money on. By paying just the minimum you will never be chipping away at the balance. You will be covering little more than the interest each month. Start paying more than the minimum and make extra payments whenever possible, even if they are small.
Do an Analysis of All Your Debt
If you are juggling more than one debt, it’s also important to take a look at everything you owe and add it all up. You can then perform the debt-to-income ratio calculation which takes a look at what you owe in comparison to what you make. This will help you to create a realistic goal of when you plan to be fully out of debt.
Stop Adding to Your Debt
Of course, it’s hard to pay down your debt it you continue to add to it. Now is the time to stop going further into debt. Start telling yourself that if you can’t afford it, and don’t have the extra cash for it, then you need to go without. Many people find they need to stop carrying their credit cards with them so they aren’t even tempted to use them.
Another way you can stop the bleeding, so to speak, is to set a low limit on your credit cards. Once they are maxed out then that’s it, you can’t use them any longer. Set a maximum that is affordable to you and that you know you could pay off.
Look Into Consolidating Debt
You may also want to speak to your financial advisor to see if you can consolidate debt. This will combine all your debt into one payment. As well, it can bring the interest rate payment down, so in the end you’re paying less.
Make Sure Payments are On Time
When you miss a payment, or make a late payment, on a credit card or loan you will be slapped with a late fee. This is like throwing money out the window. Why give your creditors even more money? Instead make those payments on time. Some creditors even offer a discount if you pay early, or set up automated payment. This is another great way to take advantage of savings that will help you pay down your debt faster.
Believe in Yourself and Stay Focused
Paying down your debt faster isn’t going to be an easy road. This is exactly why you need to keep your end goal in mind and stay focused and positive along the way, even when it gets tough. Just remind yourself how great it will feel when you are completely personal debt free!