If you want to learn how to tackle debt, you’re not alone. Most people have student loans, credit cards, and a mortgage. With the popularity of credit cards, it’s easy to overspend on things that we want without thinking about the consequences of interest charges. But, these accounts can pile up quite fast and it can get out of control.
If your debts have piled up beyond control and it’s causing you upset and stress, now is time to take charge. Keep reading to see how to tackle your debt so that you can live a debt free life.
Step 1: Pick a Path
First, you want to pick a path for your journey. You have several options available.
Option 1: Start with the highest interest card or loan: While this will take time to see results, it’s a great way to tackle the account that is causing you the most added expense.
Option 2: Pay Off the lowest balance first. If you have a lower balance on one loan or credit card, it can feel good to completely erase it. This allows you to see progress!
Option 3: Get a debt consolidation loan.
Step 2: Do the Work
Now that you have a plan in place, you need to do the work!
Option 1: Start with the highest interest card or loan.
Take a look at all of your debts and write down all of their interest rates. Once you know which account is racking in the highest interest, start making more than the minimum payment every month. Make sure that you continue to pay the minimum amount due for all of your other debts. Once the total balance for the highest interest loan or card is gone, move on to the next highest loan or card and repeat the process!
Option 2: Pay Off the lowest balance first.
Take a look at all of your accounts and list out the total money owed for each loan or credit card. Sort everything into a list with the lowest balance first. Start paying more than the minimum amount due to the lowest balance account. Make sure that you continue to make the minimum payments on all other accounts. Once your lowest balance account is down to zero, move on to the next lowest account and repeat!
Option 3: Get a consolidation loan.
If you owe a lot of money and it’s overwhelming, you may want to take out a consolidation loan. This loan will allow you to borrow a lump sum of money at one interest rate, and then you can use that loan to pay off your debts.
Do your research and find a consolidation loan with a good interest rate. Once you get your loan, use these funds to take care of all of your outstanding debts. Then, follow your repayment schedule until the consolidation loan is gone.
Helpful Hacks for Better Success
1. Use apps to your advantage: Apps like Digit, ChangEd, and Clarity Money – Budget Manager can help you stay accountable!
2. Talk to your credit card companies and ask if they will lower your rates. If you’ve continued to make timely payments every month and have had your card for a long time, they may just say yes. It’s always worth a try to ask.
You can tackle your debts and live a debt free life. All it takes new habits, follow-through, and persistence.
3. Stick to a budget and be mindful of how you spend money each day. You can learn new habits and make smarter choices so that you live a better financial life.
This is not legal, financial or professional advice. Please consult a legal, financial or professional advisor for your specific situation.
