Debt can be a dangerous thing to have. It can quietly grow into a massive problem over months or years or happen overnight because of a medical emergency. No matter the cause of your debt, it is important to know what you can do to combat it. The average debt for an American is more than $90,000, which means it is more important than ever to act to reduce or eliminate your debt. Here are five strategies to pay off debt you can employ to free yourself from financial hardships.
1. Tighten your budget
It can be easy to overlook minor expenses in your budget. However, a few dollars a month for several services begin to add up and can cost you hundreds of dollars or more every year. Consider looking into a budgeting app that can help you review your expenses and eliminate unnecessary spending.
2. Put your payments on auto-pay
One of the costliest expenses that people cannot afford to pay is late fees. Having to pay an extra $50 or more because you forgot to pay a bill on time is a prime example of bleeding money. Set your bills to auto-pay and avoid missing a due date.
3. Make more than the minimum payment
Credit cards and personal loans take more money from you the longer you take to pay them off. By paying more than the minimum, you avoid having to pay extra interest on those expenses.
4. Develop a payment strategy
You can also target your debt in two successful methods, the “snowball” method and the “avalanche” method. The snowball method involves you paying off your smallest debt first, then using the new income after paying it off to pay the next smallest debt. This way, you slowly build up momentum to clear your debt. The avalanche method works from the opposite direction, where the extra income from paying off your largest debt can overwhelm the smaller debts.
5. Consider all opportunities
Debt can be an overwhelming obstacle in a person’s life, but there are many ways to deal with it. Bankruptcy is also a powerful tool to eliminate or control your debt. If you are struggling with finances, speak with a financial counselor to discuss your options to overcome your debt. If you are wondering if bankruptcy is the right option for you, contact the bankruptcy attorneys at Minnillo Law Group for a free consultation. We can answer your questions and discuss your options.
