The overwhelming majority of American adults carry a good amount of debt, and the problem spans generations. More than 81% of millennials are in debt while 80.9% of baby boomers are also in debt. From student loans to mortgages, the fact of the matter is that debt is just a part of life. However, it can easily become overwhelming and become a huge burden.
While it may seem impossible to fight your ever-growing debt bill, there are some things you can do to start making the numbers go down. Here are 5 ways you can fight your ever growing debt bill and get your finances back under control.
1. Know What You Owe
Before you start paying down your debt, the first thing you want to do is to have a clear idea of what you owe. This includes making a list of all of your monthly loan and credit card statements. Be sure that you make note of:
- Creditor’s name
- Minimum monthly payment
- Total amount due
- Payment due date
- Interest rate
As you make a single list of your payments and total debt, you can start to better organize it. Not all of your debt impacts your finances the same. By knowing what you owe and to who, you can figure out what loan or credit card is costing you the most, meaning this is what you’ll want to pay off first.
2. Make a Plan
Once you know exactly how much you owe and to which creditor, the next step is to prioritize your payments. There are all sorts of strategies to paying off debt, but many people experience a lot of success by paying off the highest rate loan or credit card first. By paying the most on the highest rate debt and making minimum payments on your other debts, you’re able to save a lot of money on interest, which means more money goes towards the principal payment. In turn, your debt will decrease much faster.
While making a plan for which debt to pay off first, you may also want to look into a debt payoff planner. This allows you to visualize your payments and see how over time, your debt numbers will drastically decrease. These planners are also great for ensuring you never miss a payment.
3. Call Your Lenders
If your debt has become a serious burden, you may be able to make a deal with creditors. By explaining your situation to a creditor, they may be willing to waive late fees or lower your interest rate so that you can get out of a debt sooner.
Some lenders also offer the ability to open a lower interest rate loan or credit card, which means you’ll pay off existing debt with a new loan, and then pay off that loan at a lower interest rate. The key to this option is ensuring you make your payments on time and don’t slip into further debt.
Your lender may also offer you debt consolidation. This is especially true if you have multiple credit cards or loans through the same lender. With debt consolidation, your debts are combined and you make a single payment with one interest rate versus multiple.
4. Save Money
By saving money on everyday expenses, you can put more money towards paying off debt. Cook meals at home versus going out to dinner. Use coupons when shopping for groceries or personal items. Sell items that you don’t need anymore for cash.
Another clear cut way to save money is to create a budget and stick to it. With a budget, you can see exactly where your money is going as well as where there’s room for savings. By focusing on saving, you’ll have more money to put towards your credit cards and loans.
As you start to pay down your debt, you can then put your extra money into a savings account. This gives you money for paying for emergency expenses and other unplanned costs.
5. Don’t Repeat the Cycle
Many people fall into the habit of wanting to reward themselves for paying down their debt. While minimizing your debt is definitely worth celebrating, it shouldn’t come at the cost of running up a credit card or taking out a loan for a new car. While it may be tempting to get the latest iPhone or splurge on a new pair of expensive shoes, think long and hard before taking on new debt or spending a large amount of money.
By using these 5 methods, you can steadily work towards paying down your debt and eventually becoming debt free. Just remember that it didn’t take you a few months to go into debt, so it will take time to climb back out. Patience is key!
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