Debt can be overwhelming for anyone—it's easy to get tangled up in what feels like a spiderweb of bills and outstanding payments. While there's no easy trick to make debt disappear, there are plenty of strategies for cutting those numbers down faster than ever before.
In order to properly eliminate or consolidate debts, you need to make enough to pay them down, plain and simple. Balancing your accounts is tough work, but that doesn't mean there aren't ways to ease the burden of shrinking debts.
Tackle Your Debt the Right Way
If you're feeling bogged down by all of the payments you need to make, here are a few ways to help lighten the load:
1. Use debt consolidation.
One of the most popular methods for shrinking debts is through debt consolidation—combining several high-interest debts into one long-term, low-interest payment plan. Debt consolidation won't turn an unmanageable deficit into something cheap and easy, but it's a solid strategy for rolling all your debts together and paying them via one outlet.
Consolidation is great for debts with particularly steep interest rates like credit cards, but consolidated debts will naturally have a longer time required to pay them off. The upside of this is that your debts will have one clear end date. Consolidation is a great way not only to bring your debts together, but also to put everything in perspective. It's harder to ignore outstanding debts when the grand total is staring you in the face.
2. Eliminate debt accumulation.
It's simple: If you're working to eliminate your debt now, do everything you can to prevent racking up even more. Take an assessment of your financial situation, and identify what caused your debts to pile up in the first place. If it's credit card spending, try to buy using only cash or your debit card. If you got eager investing in too many ideas, establish criteria that must be met before you fork over any cold hard cash.
While shrinking debts, it's important to spend only what you have available to spend. Continuing to spend on credit just exacerbates the problem by piling on additional debt as time goes on. Remember that every bit you add to the principal of any credit line has interest attached to it. In order to tackle debt from all sides, create a budget that dictates exactly how much you can spend while cutting down your debts.
3. Siphon spending money.
Getting your budget in order is one thing, but there's more you can do with your spending allowance: Don't spend it. One of the most tried-and-true methods of slashing debts is paying them off early. Paying more than the monthly minimum can significantly reduce the amount of time it takes to bring a debt down to zero, as well as the amount of interest you're paying. Taking some spending money and directing it toward a certain deficit can make a big difference.
If you're working to eliminate your debt now, do everything you can to prevent racking up even more.
Look for places where you can painlessly reduce spending. Even small siphoning over time can make a big difference down the line.
4. Focus on one debt at a time.
Though it may seem intuitive to spread all of your “extra" payments (beyond the monthly minimum) equally across your debts, it's often more beneficial to focus all of your efforts on one loan at a time while making the minimum payments on the others.
There are two different strategies you can employ using this method. The debt snowball plan requires paying off your smallest debt before moving on to the next smallest. The debt avalanche plan, on the other hand, recommends you tackle the highest-interest debt first. The right strategy is often situational and won't be the same for everyone, but knocking down your outstanding debts one by one can help make a seemingly unmanageable situation totally doable.
Debts can often feel like itches that can't quite be scratched. They're pesky, and it can feel like forever to actually see them shrink. While no strategy painlessly eliminates outstanding debts, figuring out what you can do to make your situation work can help scratch the itch of an unpaid loan.
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