How Can I Pay My Debt Down Faster?
Outstanding balances on your credit cards don't have to follow you for decades. Credit card companies request inexpensive minimums, and if you get into a habit of making small payments, debt can linger and you can pay a lot of money in interest. Consider fast and effective methods for paying down debt quicker.
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Total Debt
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Devising a plan to remedy debt first calls for knowing how much you owe each creditor. Facing debt can prove challenging because it forces you to admit problems with credit and debt management. However, knowing the exact amount of outstanding balances puts you on the right path. Use a calculator to tally your outstanding balances. Write down this number and make note of the interest rate that you're paying on each account.
Extra Income
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Spending your extra or disposable income after paying bills can slow debt elimination. Prioritize your spending, and aim to spend less on nonimportant purchases such as shopping, dining out and recreation. Review your budget and figure out how much you spend on extras each month. Do you have an extra $300 or $400 a month? If so, use this cash to pay down balances on your credit cards and loans. For example, a $400 monthly payment can get rid of a $2,000 credit card bill in about five months.
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Monthly Payments
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Understandably, not everyone has the disposable income to drop several hundred dollars on their credit cards and loans each month. Still, there are tips to help pay down debt faster. For starters, stop sending only the requested minimum each month. Minimum payments barely reduce the principal on credit card accounts; to see a significant drop in your balance, make higher payments each month. Start by doubling or tripling payments to help reduce the balance sooner.
Interest Rate Reduction
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Other tips to pay down debt faster include negotiating the interest rate with your creditors. Use your good payment record and credit score as leverage, and when requesting a better rate, mention your plans to transfer your balance to another card company in order to benefit from a reduced interest rate. A good history with a company generally results in an on-the-spot interest rate reduction in order to retain your business.
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