Living with a lot of debt can feel like a mountain you'll never be able to surmount. If you have personal, medical or student debt and you’re serious about getting it paid down or off completely, check out these 7 easy tips you can implement today. Paying off your debt is not fun, but you'll never make any progress if you don't put forth the effort.
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1. Pay more than the minimum amount each month
I'm sure you've heard this tip time and time again. Paying more than your minimum payment on a credit card or a loan is the only way you're ever going to get your head above water. Make it a habit to pay more than the minimum due, as this way you’ll be paying more on the principal balance and ultimately, less interest in the long run. For example, if your minimum payment on your credit card is $50, pay $75 (or as much as you can afford) each month, in order to get that balance down faster.
2. Know your interest rates
Do you use multiple credit cards? There is a great probability that they all have varying interest rates, so you'll want to focus on the cards with the highest rates, and pay those off first. This sounds like a no brainer, but most of us don't have a clue what our APR is on our cards. Could you tell me off the top of your head? I didn't think so. Make sure you know your rates, and pay more on the cards with higher rates. You might also want to check out our next point below.
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3. Try a balance transfer
If the bulk of your debt lies in credit cards with high interest rates, it might be worth looking into a balance transfer card. There are quite a few really good cards on the market today with intro offers of 0% APR for up to 21 months. Most cards have a transfer fee, but that could be worth it in the long run. To learn more about balance transfer credit cards, click here.
4. Utilize your life insurance
If you have a life insurance policy, you may be able to borrow against it. Essentially, this means that you’re borrowing from yourself, which can be helpful in a pinch. You will want to pay this money back someday, to avoid leaving your family with a mound of funeral expenses. Make sure to consult your insurance broker beforehand to avoid any indirect consequences.
5. Consider a home equity loan
If you own your home, consider getting a home equity loan if you’re eligible. You can borrow money against your mortgage, usually at a much lower rate. Homeowners can most often times get a home equity line of credit at a better rate (about 4-1/2%). There are closing costs, and the value of your home may decrease overtime, so know your options before taking this step.
None of these tips will do you any good if you are not diligent and do not stay on top of your debt. Remember, having a plan to get out of debt is just as important as having a plan to stay out of debt. Once you have successfully paid off your debt, set a monthly budget and don't spend what you cannot pay off. Being mindful of your purchase is the key to prosperity.
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