(Guest Post by Debbie Westwood)
Debt is something that many people have to cope with these days, with some people having multiple debts such as mortgage, credit cards, loans, overdrafts and more. The thought of being weighed down by large amounts of debt for years to come can be very daunting, and having a lot of debt can have a serious negative impact on your quality of life.
It is therefore not surprising that so many people are keen to try and pay down their debt and free themselves of what has become a serious financial burden sooner rather than later. There are a number of ways in which you can do this, ranging from finding the best balance transfer credit cards through to sourcing low interest consolidation loans.
Tips for paying down debt
Some valuable tips that could help you to pay down your debt include:
- Consolidation: If you have a variety of small, high interest debts with a range of creditors, you may find that bundling them all into one lower interest rate consolidation loan could ease the strain. In addition to cutting the interest that you are paying, you can benefit from one fixed payment each month along with having only one creditor and repayment to deal with.
- Switch your credit card: Some credit cards charge very high rates of interest, so if you have debt on a high interest credit card, you should switch to a balance transfer credit card. You can then transfer the balance from your high interest card onto your balance transfer card and with the right card you can enjoy a generous period within which to repay the transferred debt without having to pay interest.
- Go through your outgoings: You may be surprised at how much money you can save if you go through your monthly expenditure with a fine tooth comb. Some people find that they are spending the odd $5 here and there on things that they don’t even need, and these little costs can all add up. By saving money on your outgoings, you can put extra money towards your higher interest debts to try and get rid of them more quickly.
- Prioritize your debts: While you will be keen to pay all your unsecured debts off, you need to prioritise and work out which are the higher interest debts and will therefore cost you the most. You should then focus on these, putting any spare money towards repaying them.
- Snowballing: If you have a number of different debts, you may find that some clear sooner than others. As and when your debts start to clear, rather than using the money for general spending, allocate it towards another debt, so that the second debt clears more quickly, and when that debt clears, put all of the money towards another. This is known as the snowball effect and can help to clear your debts more quickly and efficiently.
- Review your debts regularly: You will be surprised at how regularly reviewing and tracking your debts can help you to stay more focused and therefore make it easier to tackle and repay your debt. Some people continue making a set repayment on debts month in, month out, never bothering to check and see how much they owe. By tracking your debts and balances, you can stay motivated, as you will be able to see when a priority debt is coming close to clearing, and you can then make plans about which debt to focus on next.
Author Bio: Debbie Westwood is a stay at home mum who does all of the budgeting for her household. She has managed her family’s debt by consolidating with low interest loans and finding the best balance transfer credit cards to avoid paying costly credit card interest.