It takes effort overcoming debt and adopting good financial habits to retain financial health. The best part is that the road to zero debt is always open, but it involves taking a look at your finances and expenses and making a few sacrifices along the way when it comes to your spending habits.
The relief felt when your debt starts shrinking (and your savings start growing through investments) will well be worth it.
Follow these steps to be absolutely debt free and potentially financially free.
Avoid Future Debt
The best strategy to overcome and control your current debt is to ensure that you do not add on any further debt to what you currently owe. If you’re having trouble stopping your spending, try to remove the temptation completely. Hide or cut up your credit cards if you have to. Also, if you have subscribed to any of the online purchase websites, make sure to unsubscribe and remove your credit card details to prevent expenditure.
Even if you can control your day-to-day urge to spend, you still need to prepare for unexpected expenses, like a trip to the doctor or a sudden house maintenance. Set aside an emergency fund of at least $1,000 to give yourself a buffer when you have a last-minute bill to take care of.
Chose a Card and Pay-off any Debts
Select one card to concentrate repaying off. There are many options available, so select the one card that looks like an easy pay and get over with any remaining debts. The quicker you pay the credit card bill, the easier it will be to avoid any interest and fee.
One popular way, called the Debt Snowball Method, is to pay off the card with the smallest balance. This helps you give yourself an easy win and feel motivated to keep moving forward. If you’re more motivated by saving money, pick the card with the highest interest rate so you end up paying less in the long run.
Do Not Forget Other Debt Payments
Just because you put extra cash towards one credit card doesn’t mean you should neglect your minimum payments on the others. The point of getting out of debt is to free up cash and strengthen your credit. If you miss monthly payments, you’re likely to incur late fees and even go into delinquency on your account.
Lower your Interest Rates
Another method to get out of debt faster is to save money on interest rates. For credit cards, call your bank, explore and try to negotiate a lower interest rate. Ask if there are any promos or offers available to lower your interest savings. It helps if you’re a long-time customer with a history of timely payments.
Refinance your Debt
You may apply to refinance other forms of loans, such as student loan, a mortgage, or a car loan, and get a lower rate. Even if you’re focused on making extra payments on credit card debt, you can use the monthly savings from other expenses to put more towards those higher balances.