You can throw your bills into the garbage or hide your head under her pillow but there’s no way to make debt go away. You certainly can’t wish it away and, with compound interest and 20%, it builds extremely quickly.
That being said, there are a few excellent ways to pay off your debt and, lucky for you, we’ve put together the Top 10 Best ways to do it. Enjoy.
- Use the “snowball” debt repayment method.
This is a strategy that more and more people using. What you need to do first is figure out which of your credit cards has the lowest interest rate and cross your fingers that you haven’t reached the limit on that card. If you haven’t, transferring money from a high interest credit card to a low one is an excellent idea.
If that’s not possible because your balance is too large to fit on the card with the low interest rate, start paying the minimum on all of your credit cards except one of them and funnel the majority of your money into paying that card down as quickly as possible. Once you pay it off, do the same thing with the next card, continuing with this aggressive plan until all of them are paid off.
It’s called “snowballing” and, as the amount of debt that you have decreases, the amount of cash that you have to pay off the others begin to increase, snowballing until all of your debt is paid down.
You can do the same thing if you take advantage of a promotional offer on a credit line from your bank. For example, moving your money from a card with 18% interest to another one with 6% interest not only makes sense but allows you to apply the money you saved in interest towards the principal, reducing your debt even more.
Of course banks don’t generally give money away, so make sure that you read the fine print closely. For example, the interest rate that you might be forced to pay after the introductory period has ended might be higher than the one you’re paying now. Banks have caught onto people who “card hop” and many now have a stipulation that says they can’t transfer any balances off of their new card for 12 months. If they do, the normal interest rate will begin retroactively. Again, read the fine print.
- Paying more than just the minimum for your credit cards and other bills.
Millions of consumers pay the minimum on their credit cards and other bills every month, which is exactly what their banks hope that they do. The reason is simple; the longer a consumer takes to pay off their bills, the more interest banks make.
Rather than playing the bank’s game, do your very best to pay more than the minimum whenever possible. If you’re on a budget (and you should be) you should be able to see where some extra money can be taken to do this. If it means skipping some luxuries like eating out or giving up your daily Starbucks latte, just bite the bullet and do it.
Those sacrifices will give you the extra money you need to decrease your debt dramatically and, over time, save you hundreds and maybe even thousands of dollars in interest payments. It won’t be fun but, if you’re truly determined to pay down your debt and stop living paycheck to paycheck, it’s worth it.
Those are the first 2 Best Ways to pay off your debt. Make sure to come back and join us for Part 2 and, if you have any questions, drop us an email or leave a comment and we’ll get back to you ASAP with answers and info.