A Mini-Guide to Getting Out of Debt

There are a few certainties in your life that you can bank on happening. One of those things is debt. But knowing how to handle your debt can turn what can seem like a life-shattering event into one that’s doable. You can overcome your debt hurdles using these tips.

Pay Above the Minimum Amount Due

paying off your debt is just the minimum on your credit card debt and other accounts can keep you in debt for a long time. Not only does paying the minimum make it so that you’re paying longer on your debt, but it can increase the amount you end up paying over time. The interest on your account will continue to accrue over time.

Be Smart About Interest Rates

Not only should you be paying above the minimum amount due, but you should also be smart about how much you’re spending on each of your accounts. It’s often in your best interest to pay off a more significant amount on the cards that are charging you at a higher interest rate. The quicker you get the balances down on these accounts, the less money you’ll be paying in interest.

Get Rid of Low Balances

It can also be beneficial to pay off the credit cards that have the lowest balances. That is one less credit card bill you have to worry about the following month once you’ve eliminated the amount that you owe.

Tackle Tax Debts

One area that people often overlook when it comes to debt is any tax debt they may owe. If you’re in a financial situation where you have tax problems, it can be a good idea to move forward by speaking with a professional. Taking this action can allow you to get advice on how best to move forward in coming to a resolution on the problem.

Reduce the Amount You Spend

Find ways to reduce the amount of money you spend. Even though you’ve committed to paying off your debt, your life doesn’t stop. You’ll still have to buy food, clothing, and other necessities of life. Find ways to reduce the amount you pay out, so you can devote more money to paying off your bills.

Visit a thrift store or consignment shop for things you need. Even better is taking your items to these places either to get a coupon for your future purchases or money back. Use any coupons you can get for items you buy, and take advantage of free samples when you can do so for anything you want to try out. Every dollar you save can be put towards your debt.

Think About Your Savings

It can be hard to want to save money while you’re in debt, but it’s beneficial. Think of vehicles such as contributing money to a CD. Once you’re able to remove the invested money from the CD with the interest you’ve earned, you can use that money towards your remaining debt or work towards a nest egg.

Tackling debt head on is often your best bet for getting out of your financial troubles. Following each of these tips can work in your favor. It may take time, but eventually, you’ll be able to wipe the slate clean and start building your credit back up.

Image via Flickr by StormKatt