2 Strategies To Help You Pay Off Debt Faster
Posted on: 12 April 2016
If you're in a lot of debt, it probably feels like you have little control over your paycheck of where your money goes. The only way to change that is to take a deep breath and start taking steps towards getting out of debt. It might take a few months, or it might take a few years, but getting out of debt will be easier if you follow these strategies.
Consolidate your debt through a credit union.
If you're like most people, you have several different debts with various interest rates. The interest can really add up quickly on high-interest loans like 25 or 30% credit cards. The more interest you have to pay, the longer it will take to pay off your debts. A good way to lower your overall interest and also simplify your debt repayment process is to apply for a debt consolidation loan. Usually, the best sources of this type of loan are credit unions, which are more willing to work with their members and and accommodate their needs than big banks are.
If you're approved for a debt consolidation loan, the credit union will loan you enough money to pay off all of your other debts. Then, you'll just have the one loan -- your debt consolidation loan -- to pay back. The interest rate your credit union offers on your debt consolidation loan will depend on your credit score, the interest rates on your loans, and your total amount of debt. However, the interest rate of your debt consolidation loan will almost always be lower than the average rate you'd be paying if you continued to pay all of your loans separately.
Make your loan payment as soon as you get paid.
Create a budget for the month, so you know how much money you need to put towards your expenses, such as housing, utilities, groceries, and gas. Subtract this total from your total pay amount, and then decide how much of the leftover money you want to put towards debt. Remember, the more you put towards debt each month, the faster you'll pay it off. Once you know how much you're going to pay on debt in a given month, make the payment as soon as you're paid. This way, you won't accidentally spend the money instead of putting it towards debt. If you have extra money left over at the end of the month, you can roll it into the next month's debt payment.
By consolidating your debts into one loan and then making as large a payment possible as soon as you get paid each month, you can get yourself out of debt faster.
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