Settling all of your debts is a nice goal to have this year. If you have multiple credit card debts on top of other loans, it’s a total pain to pay them all at once. Fortunately, you can apply some wonderful strategies to quickly get rid of your debts and get back on your feet.
Check out these debt management strategies:
One Debt at A Time
Do you have any outstanding balance on more than one credit card? If yes, then make sure you always pay at least the minimum on each card. Then focus on paying down the total balance on one card at a time. Always check the interest rate section to see which credit card charges the highest interest rate, and concentrate on paying that debt off first. Pay off the card with the smallest balance first, and then take the money you were paying for that debt and use it to pay down the next smallest balance. Prioritizing your debts will help you organize payment efforts faster. This may be difficult at first, so you need to remain focused.
Consolidating your debt can let you combine several higher-interest balances into one with a lower rate. By doing his, you only need to pay one debt. You should always take advantage of a low balance transfer rate to move debt off high-interest cards. Be aware that balance transfer fees are often 3–5 percent, but the savings from the lower interest rate may often be greater than the transfer fee. Always factor that in when considering this option. If you have equity in your home, you may be able to use it to pay down card debt. A home equity line of credit may offer a lower rate than what your cards charge. Be aware that closing costs often apply, but an extra benefit is that home equity interest payments are often tax-deductible. Do your research first before proceeding with any loan consolidation service. Also, some lenders are not open for consolidation because they might be compromised.
Budget Planning and Assessment
Budgeting is an important habit that everyone should learn. When it comes to budgeting, your credit card statement can be a helpful tool. Next, look for areas where you can cut back. Maybe you don’t need that fancy magazine subscription or Internet complementary service. Don’t worry – everything you’ve cut back is only temporary. Once your financial state is back on track, you can spend for fancy things again.
Once you can apply these strategies to your debt repayment process, you can take some of your financial worries away. Just remain focused and always use your debt for valuable things.