Most Effective Methods of Paying Off Debts
While you may be able to shred mail reminders and dodge phone calls, debt is a problem that simply doesn’t vanish. It can hover over you much like a dark cloud for as long as you allow it. However, paying off debts via tried and true effective methods can free you from debt if you can just stick with it. With the right resources, paying off debts doesn’t have to be all that difficult either. Anyone can do it. Here are some of the most popular ways that others just like you have discovered for paying off debts.
Pay More Than the Minimum
It’s absolutely crucial that debtors break the habit of only paying the minimum balance required each month. This sum of usually just 2 to 3 percent only prolongs the outstanding balance and therefore your plight. In actuality, it is exactly what the banks want you to do as the longer it takes for you to pay, the more interest they make in the end. Try to bite the bullet when it comes to paying off debts. Examine your average monthly expenses and see where you can spare to shave some. Skip eating out. Eliminate happy hour and desserts. The little luxuries can wait until those debts are paid in full.
Snowball Your Payments
When it comes to paying off debts, you’ll need to take a careful look at your credit cards. Which one has the lowest interest rate? If you have yet to reach the maximum limit on that card, then consider transferring the highest interest bill to it. Most cards allow for such instances and it’s honestly quite silly not to take advantage of. In cases where your entire balance is too great for one low interest card in paying off debts, just pay the minimum amounts due on all of your cards except one. The majority can be funneled into that one credit card to be paid off as swiftly as possible.
Cash Out Your Savings
Paying off debts can mean making tough choices. Cashing out your savings may be one of these. You can potentially use the proceeds toward debt repayment though. While understandably no one wants to have to do this, in the long run, it proves beneficial for many.
Borrow from Your 401(k) Plan
If you happen to participate in a 401(k) qualified retirement plan with your job, it’s helpful to know that most plans will allow you to borrow as much as 50 percent of the account’s value (or $50,000) whichever is smaller. Paying off debts with these interest rates are ideal as they are usually cheaper than the ones associated with credit cards. Aside from the interest rate being so much lower the rate that is typically associated with credit cards, you are actually just paying back yourself. Paying off your debts in this way means every dime of interest goes directly into your account.
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