When you do some research on the number of individuals that are debt-free in America, you will find that the number is very low. Most Americans are tied up in all kinds of debt ranging from student loans to mortgages, balance on their credit cards, and many other debt obligations weighing them down. This article has compiled a list of the ten effective and easy solutions that you can use to conquer your debt issues.
1.) Know the difference between a good debt and a bad debt
Most personal finance experts view al debt as bad. But that isn’t necessarily true. A loan can be exactly what you need to get that degree which will earn you a spot for a high-paying job in the future. What’s so wrong with that? The only difference comes when you use the loan irresponsibly.
2.) Cut the cost of your student loan
You can also use a personal loan to cut the cost of your student loan. On average, most Americans carry about $27,000 in student loan debt. And that’s a huge burden for most people. The good news, however, is that you can now refinance your student loans plus save thousands of dollars in the process.
3.) Pay off your credit cards
You can also use a personal loan to pay off your credit card debt and consolidate your loan. You can also apply for a balance transfer. You can do this to consolidate your debt into one low-interest bill. Debt consolidation may seem like an attractive idea at first. But you need to check whether the debt consolidation process will actually help you or not. At other times, it may end up hurting you more than help. So, make sure you do your calculations well before making such a move.
4.) Pay off your mortgage early
A loan may be exactly what you need to pay off your mortgage early. An early mortgage payoff can give you a piece of mind plus financial freedom. But then again, it might make more sense using the funds to invest in dividend stocks rather than pay off the debt early. But the truth is that you may be able to save thousands of dollars by paying off your mortgage debt early with the low-interest rates.
5.) Use the Debt Snowball method
You can choose to use the snowball method, made popular by Dave Ramsey to pay off your debt more quickly. This means that you basically apply most of the available money at your disposal in paying off one loan at a time. Then when you are done with one loan, you simply tackle the next one until you get done with the whole bunch. It’s upon you, however, to choose whether to start with the loans with the smallest balance first. Or you can also opt for the loans that accrue the highest interest rates.
6.) Negotiate your loan amounts and credit card interest rates
You will definitely be able to pay off any credit card balances and any other loan amounts faster if the interest rates are lower. But that won’t simply happen by itself. It’s upon you to call your lender and negotiate with them if you can get better terms on your loan amount and adjustments on your interest rates. You never know, you may just be lucky and have lower interest rates applied to your loan.
7.) Pay off the most painful debts first
Okay, all kinds of debt are sort of painful in its own way. But there are some debts that can weigh you down more than others. And other debts may even affect you emotionally as well. Work out how you will rid yourself of such debts and relieve yourself of any stresses that they come with. Then you can work on the other debts afterward.
8.) Pay down your debts and at the same time, invest
Yes! You can pay down your installment loans and also invest at the same time. It doesn’t always have to be an either/or kind of situation. Where you feel you either work on paying off your debt or investing. You can do both without much stress too.
9.) Use any extra cash to pay down debt
You should also make it a practice to use any extra money at your disposal to pay down your debt. It doesn’t matter the amount that you have extra. Be it $1 or $100. As long as you feel that you can do without it at the time, then why not use it to pay down your debt?
10.) Stop adding to your current debt
Refrain from adding to your current debt by taking more debt. You will only be digging your own financial grave. Going even deeper into the ground.