Building your retirement corpus seems tougher when you bear a high amount in debt. You’ll find it difficult to meet your financial goals like paying for your child’s education.
While submitting your application for joining a military, financial, or law enforcement service, you might have to undergo a credit check. The employer might consider rejecting your application if your credit history reflects excessive debt.
You stand more risks of accepting bribes when your financial position seems vulnerable statistically. You may seek guidance from professional companies like CreditAssociates.com.
Check Out a Few Good Ways to Turn the Tide In Your Favor:
1. Pay above the Bare Minimum
Draw a specific budget and determine the extra amount you could spend towards meeting your debt. If you’re paying only the minimum, you’re paying more on interest and taking more time to pull out of the debt burden.
Suppose your credit card shows a balance of $15,000 and bears an APR worth 16 percent besides a minimum payment of $400. If you pay $500 every month towards the debt, you will end up clearing it faster besides saving more on your interest charges.
2. Attempt the Snowball Method
Reducing your debt gets faster when you attempt the debt snowball method. Here you pay an extra amount towards interest charges every month.
While following the method of debt repayment, you will need to pay a little more towards the smallest debt while meeting the minimum payment for the other debts. This way you’ll get rid of the smallest debt faster while continuing with repaying the rest.
For instance, since the total balance of the auto loan proves the lowest, you must pay it off first as per the snowball method.
3. Try Debt Refinancing
Saving on the interest charges while paying off your debt to a large extent is possible when you consider refinancing debt at a lesser rate. Refinancing car loans, personal loans, and mortgages are very much possible. You may pick a personal loan that acts as your debt consolidation loan while offering a lower rate of interest as compared to your current debts.
You may choose to carry your debt forward to a balance transfer card. It enables you to pay your debt off within a period of up to18 months while the APR stands at 0 percent at that time.
- Bring Debt Down with Windfalls
You shouldn’t let go of the small amounts that you receive in the form of a performance bonus or tax refund. Instead of splurging them on entertainment or parking them in your bank, you can add them to your repayments.
On the other hand, you may choose to split the amount towards meeting the cost of an expensive dinner and your debt repayments.
4. Settle It Out For a Lesser Amount
You’ll even need to pay off much less than the amount you owe when you arrive at a debt settlement with your creditors. Although you may do it on your own, you may also pay a small fee to a third-party company for settling your debt. However, the FTC warns you of some risks concerning such a settlement.
The debt settlement companies urge you not to pay towards your debt if you wish to negotiate new terms. You mustn’t forget that stopping your debt repayments can leave a negative impact on your credit score.
