This post is written by Jenny Daniels:
There are a number of reasons why people have an enormous amount of debt. For some, it’s student loans or a job layoff. For others, it’s a sickness in the family or unforeseen expensive home repairs. Yet others, just can’t seem to stop spending money. Whatever your reason it’s important to make every effort to reduce it as quickly as possible. Debt is something that piles up slowly until one day you realize that you have more to pay out than you are bringing in. If this sounds similar to what you are currently dealing with, you are not alone. Fortunately, there are ways to reduce the amount you owe and get back to living your life without the added stress.
Eliminating the debt you don’t use
Many people buy things on impulse. At the time, it seems like a good idea like a third car for recreational use only or a timeshare located in a place you plan to vacation once or twice a year. If you need to reduce your debt the first place to start is with these extra luxuries that are consuming a part of your monthly budget. You could place an ad online or in your local newspaper to sell off your car. In the case of ending your timeshare, there are companies who offer to get you out them. If however, your timeshare is in a location that no longer attracts business you may have to seek outside counsel to unload it or you could simply give it away and have someone take it over.
Paying down a mortgage and student loans
If you own a home and have a mortgage and you are still paying off your student loans, chances are a good portion of your paycheck is going out the door. Instead, refinance your loans into one payment. If you have equity in your home and the current interest rate is lower than when you acquired your mortgage you could refinance and use the money to pay off your student loans. If you don’t have any equity you can still pay off the debt sooner. If you add just $100 extra to your loans each month you are paying off $1,200 off the principal each year. When you free up other monies or get a raise, you can use a portion of the money to increase the amount and pay it off sooner. The same goes for your mortgage. Even though you took out a loan for 25 or 30 years, it doesn’t mean that you have to pay it for that length of time. Start slow and add whatever you can and send it marked principal only.
Credit card debt
Credit card debt is something that can hurt you across the board. Having too much can lower your credit score and paying 30 days late even once can have a negative effect on your score. The good news is that you can reduce this debt faster than you might imagine. If your credit score is still in good standing you can apply for a credit card that offers a balance transfer interest-free. By doing this, you won’t pay any additional interest on top of your balance for up to a year. This gives you extra tome to clean up your credit card debt and the best part is that every penny you pay will go towards the original balance.
Learning to live frugally
If you are serious about getting rid of your debt, you may want to adjust your lifestyle and learn to live frugally. This doesn’t mean that you can’t go to the movies or dine out, it simply means that you need to do it in moderation. If you currently order out or dine in a few times a week, cut it back to once a week. There are so many ways to reduce your monthly living expenses. You can use coupons at the grocery store and wait for a sale of something you really need. If it’s something you want, save up for it. The reward for doing this is that you will own it free and clear without interest added and you won’t add any more debt to your monthly budget.