Smart Reviews

Paying Off Debt

Carrying personal consumer debt is never a sound financial practice, yet many people find themselves in exactly that situation. These handy tips will help you pay off your debt as quickly as possible and get you back on sound financial footing. First, you must begin to actively manage your credit cards and other unsecured debt obligations. Too often, people want to bury their heads in the sand and hope that the problem will go away if they continue to pay their minimum payments each month. It may be difficult at first but once you face the issue head on and create an action plan the problem will seem a lot less daunting.

If you have multiple credit cards you need to know the balance, credit available, and interest rates for each. This information will help you to focus on the accounts with the highest rates and make more progress in your debt reduction. It goes without saying that it is imperative to pay at least the minimum amount each month, if possible, pay a little extra on the account with the highest interest rate, even $5 a month can make a difference. Balance transfers are often available at 0% for a limited period of time, if you have this option available, transfer the balance from your card with the highest interest rate in order to make faster progress in your debt reduction.

An emergency savings account can also make an impact on your progress in a positive manner. If an unexpected expense arises use this account, rather than a credit card to make the payment. It is increasingly difficult to pay off your credit card balance if you continue to use the card. If you do need to access credit for expenses be sure to utilize the account with the lowest rate.

When you become serious about your desire to pay off debt, it is important to remind yourself that it is a temporary situation. Scaling back on extraneous expenses and trimming your budget to the essentials is much easier to stick to when you know it won’t be forever. Take the time to pack your lunch rather than buying it and start to look at going out to dinner as a treat rather than an option every time you don’t feel like cooking at home.

In addition to adhering to a strict budget, another effective way to kick-start your debt payoff challenge is to sell any items that you no longer want or need. There are multiple ways to sell unwanted sporting equipment or electronics that are gathering dust, instead of stowing them away in the closet sell them and use the cash to pay down the card with the highest rate. With a little ingenuity, discipline and payment management you can make great progress in paying off your debt. Keep this steps in mind to prevent falling back into bad habits and creating a financially unhealthy debt cycle. Going debt free is an attainable goal that will pay dividends to your overall financial health!