It’s hard to get out of debt and stay there. Many people fail or succeed, only to get caught in the vicious circle again and again. It takes grit, determination and time to eliminate debt.
You should be aware that every type of debt has a different approach. How to get rid of different kinds of debt.
Charge card debt
Use the snowball to tackle credit card debt. This method allows you to pay the minimum amount on all other debts while tackling the smallest one first. After paying off the debt, transfer the entire amount you paid on the card to the next largest balance. Repeat the process.
You might be tempted by the interest rate. This is known as debt avalanche. This will work. You must remember that debt is more emotional than logical. It’s likely that you didn’t use much logic to get in debt. You won’t be motivated to pay off your debts by logic. Debt snowball allows you to achieve quick victories by tackling smaller debts first, before tackling larger debts that require more patience and time. It is contagious to win, and this habit helps you gain momentum.
It may be worth contacting your credit card providers to ask them to lower your rate. It doesn’t harm to ask. Some companies will lower your interest rate and others won’t.
Personal and car loans
Auto loans and personal loans differ from credit card debt. They both follow the same repayment principle. You should first make sure that you fully understand the terms of repayment and then ask the lender to lower your interest rate.
You can also call the lender and ask for bi-weekly payment schedules instead of monthly payments. You still make the minimum payment, but you’ll only be making 26 payments per year instead of 12. The total interest that you pay will be lower. You can reduce the repayment period by months or even years if you make more than the minimum.
Student Loans
It is possible to pay off your student loans, despite how you may feel. Just have patience, discipline and a plan. Student loan debt is second to mortgage debt for most people.
You can do this by visiting the National Student Loan Data System or contacting your lender. This can be done by visiting the National Student Loan Data System, or contacting your loan provider. Visit the Federal Student Loan website and see if there are any consolidation options, interest rate reductions, or loan forgiveness programs. The Department of Education has eight repayment plans which may help you if your income is low or you have special circumstances. The Department of Education also provides repayment calculators, as well as a variety of information and resources to help you repay your loans faster.
It’s time for action once you have determined the amount of debt owed and found a plan that suits you. If you can, pay off the debt as quickly as possible.
You can also find out more about Mortgages
In old French, the term “mortgage” literally means “death promise.” What a fitting phrase. There are different schools of thought about whether or not you should pay your house off early. Some people think it makes sense to pay off their home early, while others don’t. You can speed up the repayment of your mortgage if you want to.
Pay bi-weekly
You can save years by splitting the monthly mortgage payment in equal portions and paying it every two weeks. You can speed up the process by paying more than the minimum. You will need to work with the lender to establish a biweekly payment schedule and make sure that any extra money goes directly towards the principal.
Make an extra mortgage payment every year
The mortgage is affected in the same manner as bi-weekly payment. This is done in a lump sum rather than over the course a year. You must specify when you make your extra payment that you want it to be applied directly to principal.
Pay in lump sums periodically
You can pay more on your mortgage if you cannot afford to make the bi-weekly payment or a large extra mortgage payment. A few hundred dollars extra a couple of times a year can help speed up repayment. Each little bit counts.
Refinance a 30-year fixed rate mortgage to a 15 year fixed rate
It is worth thinking about, even if it doesn’t make sense to everyone. You will be able to pay off all your other debts by the time you are ready to aggressively begin paying off your house. You can pay more. Your credit score will also have improved, allowing you to refinance with a lower rate of interest. This can reduce the repayment period by over half.
Create an emergency fund first
Unexpected expenses are the fastest way to derail any debt repayment plans. You will have plenty. Setting up an emergency fund is essential to your success. A few thousand dollars for emergencies can keep you on track and prevent you from accumulating new debt. It will also do wonders for the psyche.
You can pause the debt repayment plan if you have an urgent need to spend some money. You can use the money you would have spent on your debt repayment to replenish your emergency fund. After you’ve restocked your emergency fund, you can get back to fighting the debt.
