Tired of seeing past
due bills pile up? You can get out of debt by changing a few habits.
Here are some ways you can reduce your debt:
Stop adding more debt. When you see
something you want to buy, stop and ask yourself if you want it or need
it. Adding more debt by making unnecessary purchases when you still have
debt to repay will make managing your debt more difficult.
Ask your lender about repayment
plans. Lenders want their money back, and many are willing to work
out a repayment plan. Simply call your lender and ask if they can offer
you a repayment plan that is realistic for your budget.
Look for the best interest rates when
consolidating your debts. By obtaining a debt consolidation loan
from a bank or credit union, you are able to manage your debts more easily
since you make only one payment (to the bank or credit union) rather than
several payments (to all of your current lenders). Often, the bank or
credit union may offer you a lower interest rate than the rates on the loans
you owe, so shop around for the best rate before consolidating.
Pay your bills in full and on
time. Paying your bills in full and on time will allow you to
avoid high interest rates and late fees. If you're unable to make full
payments, aim to pay more than the minimum due to avoid paying more in
interest and fees.
Pay off your high-interest debts
first. If you have multiple bills to pay, paying off the debts
with the highest interest rates and fees first will reduce the amount of money
you owe in the long run.
Check your bills carefully. When you
receive your bills and statements, make sure they are accurate and your rates
remain the same. If there are errors or your rates increased without any
explanation, call your lender to fix accordingly.
Don't open too many credit
cards. Having too many credit cards can make it hard to keep track
of how much you owe and when you have to pay your bills. Having lots of credit
cards (especially if you do not make payments on time) may have a negative
impact on your credit
score.
Create a spending
plan to track where your money goes. A
spending plan helps you see how much you bring in and how much you
spend. Cut back or even eliminate items that you don't need.
An example of cutting back would be purchasing clothes at a low-cost
retailer rather than at a designer store.
An example of eliminating an expense would be canceling
cable.
Create an emergency
fund. Any time you get extra money you don’t anticipate,
such as a tax refund or bonus, put it into an emergency fund. This way, the
next time you need extra cash you won’t have to use your credit card.
Get help from a credit counselor. If
you need help in developing a debt repayment plan, consider speaking with a Financial Empowerment Center
counselor. Be careful of companies that claim they can pay off all
of your debt quickly with one low fee, because it could be a scam
