Magnify Money, Americans tend to rack up about $1,054 in debt during the holiday season,
but many people aren’t able to pay more than the minimum. With a
15% interest rate and a minimum payment of $25 a month, it can take more
than a decade to pay off the debt of a single holiday season. While this
is a bleak picture, there are ways you can help alleviate your credit
card debt before you find yourself facing significant financial issues.
Focus on the Highest Interest Debt First
To avoid delinquency, it’s necessary to make the minimum payments
on all your debt, but if your debt is spread across multiple credit cards
and loans, you should focus on paying off the highest interest debt. Take
a few minutes to organize your debts in order, based on the interest rate.
Tackle the one with the highest interest rate first, even if it doesn’t
have the highest debt amount.
It can be easy to look at your overall debt and try to pay off the biggest
debt first. While this is satisfying to accomplish, interest can easily
sneak up. You may end up paying far more due to high interest than you
would have otherwise.
Always Pay More Than the Minimum On Your Focus Debt
Now that you’ve determined which debt to focus on, it’s time
to pay it off. Paying the minimum amount will help you keep the credit
card company off your back, but it won’t help you may any substantial
progress in paying off the debt. Keep paying the minimum on the rest,
but find ways to pay anything extra on the bill. Adding even a little
bit to your monthly payment will reduce the total amount you pay, since
you will be paying back your debt faster than the interest can build.
Clean Out Your Closets
While this may not be the easiest way to make money, it’s a good
start. Go through your closets, cupboards, garage, and attic, looking
for things you don’t use. Whether it’s that blouse that just
isn’t your color or the kayak you never are going to use again after
that one trip to the lake, it can help you repay your credit card debt.
DePop and other mobile fashion apps can be great for getting rid of clothing.
Check out Craigslist and LetGo for nearly anything, from winter coats
to hobby supplies and sports equipment to collectibles. Ebay is also a
favorite site for selling nearly anything. Choose your method based on
your schedule and needs. If you don’t want to deal with the hassle
of shipping, use a pick-up method of selling, such as Craigslist. You
may even choose to have a good old-fashioned yard sale.
Remember, this isn’t about getting the highest value out of your
old stuff, this is about getting the best value. Price your things to
sell. It’s better to get rid of them for less money than to never
sell it because you’re seeking too high a price. This can also save
you from the trouble of relisting an item because it didn’t sell.
Transfer Balances and Consolidate Your Debt
It can be overwhelming to consolidate your debt into one big lump sum,
but there are many benefits to doing so. Consolidating debt may lower
the interest on your higher interest debt. Transferring your balance to
one card is one way to help consolidate your debt. Many credit card companies
offer balance transfer deals for new cardholders.
Often, these deals allow you to transfer the balance of one or more cards
to the new card with a low, or even no interest rate for a set period
of time. Because you aren’t paying interest for that period, you
can focus on paying of the debt amount without the interest piling up.
Alternatively, you can transfer your highest interest balances and pay
the minimum while you have low or no interest, and focus on paying off
other debts that still have interest.
Make Smart Cut Backs
Often, the term “cutting back” makes people think of losing
their little pleasures, but it doesn’t have to. Instead, look on
other ways you can save money, so you can still enjoy your life while
freeing up some additional cash to pay off your bills. Look for ways you
can save on energy bills, such as turning off your lights when you’re
not in the room, adjusting your thermostat by a few degrees to lower your
energy costs, and insulating and sealing your home. Buy the generic version
of products you normally, use, since many generics are just as good as
the name brand.
It can be easy to find yourself struggling to repay your debt, but you
don’t need to face your debt issues alone. If you are being confronted
by creditors, foreclosure, wage garnishment, tax liens, or other debt
problems, don’t hesitate to get in touch with our Worcester bankruptcy
attorney. At the Law Office of Robert W. Kovacs, Jr., we are ready with
our caring, client-centered approach to help you find relief from your
Learn more about the ways we can help by scheduling a free case evaluation
with our legal team. Contact our firm by calling (508) 645-4073.