Whether its loans, a mortgage, credit cards, student loans, or other debt, we can quickly feel weighted down by our debt obligations. With good money habits and taking a few extra steps, we can better manage – and much more quickly – pay off that debt.
First, Do Some Math
Take a moment to write down each loan and credit card balance and monthly payment. Before you can decide where you want to be, you need to know where you are.
Next, Get Motivated
Use our loan calculators to see how much you can save if you were to pay off a loan one year sooner. Or two. Or three. You’d be surprised how much you can save, and this can be a huge motivator to stay focused.
Pick One Card
It’s great to have a goal to pay off your credit card debt, but it can become hard to manage if you are focusing on all cards at once. Start by making a bite-sized change and focus on the card with the smallest balance. Pay extra on this card each month while continuing to pay the minimum on your other cards. This will help you pay off that card much faster. Once you’ve paid off the smallest card, move to the next smallest and add the amount you were paying on the previous card to the amount you are already paying on this card. You won’t even miss the money because you are already used to budgeting it each month!
Put the Card Down
This is the hard part. Making higher payments to pay off your card(s) sooner only works if you stop using them. Consider these tips to help curb the urge to spend:
- Put them away. Take the cards out of your wallet so that you are not tempted to spend money on an impulse buy. This forces you to take the time to think through a purchase. Most of the time, you will find that the impulse to spend goes away once you’ve left the store and gotten home.
- Store them somewhere accessible, but inconvenient, such as a safe deposit box or lockbox. This way, you have the cards if an emergency arises, but you’d have to go out of your way to access them.
Consolidate Your Loans
Sometimes, you can save more in both interest and overall payments by consolidating several loans or credit cards into one monthly payment. Not only can this save you money, it can make it easier to manage your money with fewer payments to keep track of.
Use Your Equity
While you’re considering consolidation, if you can find equity in your home or car, consider refinancing to consolidate unsecured debt (credit cards and personal loans) as secured loans typically have a significantly lower interest rate, thereby saving you money over the life of the new loan.
Find Opportunities to Pay More
If you find yourself with some extra cash, consider making a bonus payment on one of your credit cards or loans. You’ll find you won’t even miss it, and in the long term, it will save you even more in future interest.
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