Paying at least 15% of your salary (or income from Social Security or pensions) towards your credit card debt and loans will help you get rid of those debts much faster than the minimum payment required by most card issuers (typically around 2% of the outstanding balance each month). Monthly or yearly, your outstanding debts will continue to accumulate interest if you just make the minimum payments due. Paying off large sums of debt in a short length of time might cut your interest costs significantly, leading to significant savings.
Focus on paying off your largest debts first.
Don’t be ashamed to put money away for the purpose of paying off debts with high interest rates. Paying off large amounts of debt with available cash is a wise decision since it eliminates the need to pay interest on the remaining balance. It’s comforting to know that you have some savings stashed away, but given today’s historically low interest rates, that money isn’t doing much of anything for you. Try to keep from using up your savings account. If you find yourself in possession of a substantial chunk of cash, you should prioritise paying off your debts. So how to get rid of debt?
Make an effort to negotiate a lower rate of interest.
You might contact your loan servicers and ask for a lower interest rate. As a result of your excellent payment history and account status, many of your creditors will be more than happy to reduce your interest rate.
If you’ve been on good terms with the same institution for a while, you can be eligible for a lower interest rate. You may be able to reduce your interest payments as you make progress on the principal balance during the year.
Your tax refund should be used to reduce your outstanding financial obligations.
Instead of using your tax refund cheque to make a big purchase or fund an extravagant trip, consider putting that money towards paying off some or all of your current debt. Think about how much easier it would be to manage your finances if you could just make one giant payment to wipe off all your debt at once. Forgo the momentary elation of buying something in favour of the year-round and lifetime contentment that comes with carrying a less debt load.
To raise money, sell your goods at auction.
Think about what you might sell on online auction sites like eBay or Craigslist, or even at a yard sale, and write everything down. You may rapidly reduce your debt load by selling unwanted or unused items and investing the money you make towards paying down your debt. If you decide to sell things you no longer need or want.
Consider tapping into the death benefit from your policy.
Cashing in your life insurance policy might be a viable choice for debt repayment since it will allow you to pay off larger quantities of debt more quickly. If you’re drowning in debt but don’t have a spouse or kids who would inherit your policy upon your death, you may want to consider cashing out your life insurance policy and using the proceeds to reduce your outstanding balances.