How to Pay Down Debt Faster
Paying down debt not only helps increase your personal credit ratings, but if applying for a home loan or auto loan, little consumer debt can increase buying power. Getting rid of high balances takes time and an effective strategy. Rather than let debt accumulate beyond control, take steps to pay down balances now and live a relatively debt-free life.
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Instructions
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Leave credit cards at home to avert any temptation to use plastic. If you must use credit for an emergency, only charge what you can pay off within a month's time.
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Lower your balances quicker with higher monthly minimums. The asking minimum for credit cards usually pays off the interest charges and a small percentage of the principal. Knock down your principal faster and get rid of debt sooner with lump sum payments. Aim to double or triple the minimum each month.
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Fight for a lower interest rate. Reduce how much you pay in interest each month by calling your card company and negotiating a better rate. If the company won't budge on the rate, begin shopping around for a new credit card.
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Ask for a salary increase. Extra income provides the opportunity to pay down debt faster. Approach your boss about a raise, or consider other avenues to generate cash such as applying for a part-time job for the weekends or evenings or starting a home business.
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Borrow from your home equity to get rid of consumer debt. If you have a lot of equity in your home, you can take out a home equity loan to pay off credit cards. Home equity loans usually have low interest rates and low monthly payments. Understand the risks. Defaulting on a home equity loan can trigger a mortgage foreclosure. Ensure you can afford the payment before signing loan documents.
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