9 Tips to Paying Down Debt
Being in debt isn’t usually a great situation to be in, but there are certain ways in which you can make your debt more manageable. From short term loans to balancing your saving, here are the top 9 ways to pay down your debt faster.
1 – Negotiate a plan
Speak with people you owe money to. Many are willing to negotiate a plan with you to pay off the debt, perhaps freezing the interest, even if it takes longer than originally anticipated.
2 – Lower your interest rates
High interest rates can make up the largest proportion of any debt you are paying. Simply asking to lower your interest rates can often work, saving you a lot of money over the term of the debt.
3 – Automate payments
Late payments can attract charges, and charges soon add up. By automating your payments, you’ll never miss a payment or accidentally pay late, which means you won’t face those charges to begin with.
4 – Balance your saving
It’s tempting to try to save money while paying off debt, but in many cases the interest rate on your debt is higher than the interest on your savings. You can still save, but make sure to balance it against your debt payments so the interest works in your favor.
5 – Make overpayments
Where possible, make overpayments. Just a few dollars here and there can reduce the interest you pay and shorten the length of any debt.
6 – Short-term loans
Short-term loans can be a great way to save money when in debt. While it may seem counter-intuitive to add further debt, short-term loans can replace other loans or debts with a simple solution and a low interest rate. If you have several small debts to pay, short-term loans can allow you to consolidate them all into a single payment that is often lower than the individual debt payments.
7 – Use balance transfers
Some credit cards have special deals wherein you can transfer the balance of another card to them and pay 0% interest for a certain period. Make use of it!
8 – Be accountable
Find a trusted friend or family member and let them know you have debts. Tell them to check on you regularly to make sure you are keeping up with the payments – accountability often leads to more consistent action and saves money by not attracting late fees.
9 – Make the debt your priority
If you make a little extra money by selling a possession, getting a tip, or anything else, consider putting it toward paying your debt. The sooner it is paid, the less you’ll pay in interest.