6 Tips To Help You Pay Off Debt

In October of 2017, consumer credit card debt in the U.S. was nearing levels it had not reached since before 2008.

 

This indicates American consumers have are making more and larger purchases with their credit cards and many may be putting off paying their credit card bills, which contributes to increased credit card debt. If this sounds similar to your situation, then you may want to consider new ways to start paying off your debt as quickly as possible. As interest rates continue to rise, the cost of maintaining balances on your debt will keep increasing, as well. Learn how to pay off your debt before it starts costing you more than you can afford.

The best solution to debt is to avoid getting into it in the first place. Two key ways to avoid getting into debt are to build up an emergency fund to help you when unexpected expenses arise and to live within your means. Assuming you already have debt, however, there are several helpful tips and techniques for paying it down as quickly, easily and painlessly as possible. The more such tips you apply at once, the more quickly and easily you can find yourself free from debt.

1. Address the Key Causes of Your Debt

If you keep amassing debt, then no amount of paying it down will keep that debt from rising. Therefore, it is essential to figure out why you keep accumulating debt and how you can break that pattern for your other efforts to pay down debt to be effective. There are three primary scenarios that lead people into debt:

  • You lost a job but made no corresponding changes to your spending habits.
  • A sudden influx of unexpected expenses came up all at once, like auto repairs, family vacations and medical bills.
  • You received reimbursements for work expenses but did not apply those reimbursements to recouping those expenses.

2. Stop Using the Credit Cards You Are Paying Off

If you have a balance due on a credit card, stop using it until you pay it off, and then consider continuing not to use it thereafter. Many consumers think they can continue using their cards and simply pay the month’s new charges plus an extra bit toward the existing balance. The problem is, it never works out that way. Even the rewards you earn from rewards cards are not worth the one-step-forward-two-steps-back cycle of continuing to build debt on a card, even as you attempt to incrementally pay it down. Do not forget that even if you succeed in paying all new charges on the card, all the remaining balances are accruing interest, which only makes the balance bigger for next month.

3. Stop Looking Up Your Credit Score

Tracking your credit score obsessively does little to help you pay off your debt and can do a lot toward increasing your anxiety over your debt. Remember that there are many different scoring methods, and each one uses a different set of criteria. Your credit score reveals far less about the current status of your debt than about your credit history in the past. A common misconception is you should carry a balance on your open credit cards in order to boost your credit and maintain high credit. What actually matters is the ratio between your balance and the timeliness and amount of your payments. You can improve all three of these factors by simply making payments on time.

4. Budget for Debt Repayment

Many people who have the foresight and planning to create a budget neglect to incorporate debt repayments into their budgets. If you do not account for monthly payments on your credit card and loan bills in your planning, you may lack the funds to pay those bills when their due dates arrive. Moreover, if you have not planned for your monthly payments on your debts, those due dates may well come and go without you even remembering them.

 

5. Systematize It

If you want to be sure to do something on a regular basis, one of the best ways is to make a routine of it. To ensure you make regular payments on time to all your creditors, turn it into a routine. Create a system you follow each time, such as always paying on the same day of the month while sitting at the same desk with the same beverage in front of you and the same soothing music playing. Pay using the same methods, such as by check or online, out of the same bank account and pay the same amount to each respective creditor each time. By creating a system of making payments on your debt, you can more easily turn it into the sort of routine that becomes habit. Once making payments against your debt becomes habit, it becomes easy and stress-free, and you set yourself well on your way to becoming debt-free.

6. Go Easy on Yourself

Like you, millions of other people build up debt, and many of them are overwhelmed by it. The one thing that will not help you to pay off debt is beating yourself up about it. Even when you formulate a debt repayment plan and execute it according to the strategies outlined above, you may not always be able to keep to the plan. Emergencies occur, circumstances change and, above all, you are human. In other words, if and when you slip from your plan to pay off your debt systematically, forgive yourself and keep moving forward. There are other priorities besides getting out of debt, such as your health or your family. If you get confronted with the choice between putting your health or family in jeopardy or straying from your debt repayment plan, give yourself permission to take care of what matters most. The lack of stress you place on yourself and your debt repayment strategy will ultimately help you feel more comfortable and safe sticking with it for the long haul.

 

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