The average American carries about $8000 in credit card debt, not including mortgage or student loan debt. For many people, their debt has gotten so high that they aren’t sure how to get out from under it. As a result, they freeze and do nothing at all.
However, letting your debt get worse and worse isn’t a smart plan. The longer you go without paying your debts, the lower your credit score will sink. The lower your credit score is the less eligible you are for things like home loans or even cell phone contracts.
If you have debts that are overwhelming you, take a look at the best ways to get started.
Get a Clear Picture Of Everything You Owe
The first thing you’ll need is to have a full picture of everything that you owe. Gather all of your bills and make a list. Whether you owe a judgment or have an outstanding medical bill, put it all together in one place.
Once you have an idea of the total number of what you owe and where it should go, you can start developing a plan. Once you have your total, put together a budget of how you’ll be able to make payments on each one. You may have to contact some of the lenders to work out a deal with them.
One of the most straight forward ways to get out of debt faster is to lower your interest rate. You can do this by transferring your balance due to a lower-interest card. Ideally, you may even be able to transfer all of your debt to a card that has a 0%APR introductory rate for the first year. If you plan to make payments aggressively, then you could conceivably pay off all your debt in a year interest-free.
Get a Low-Interest Rate Loan
Another option is to apply for a low-interest loan. Usually, personal loans offer consumers a considerably lower interest rate than traditional credit cards.
If the majority of your debt is a result of your car payments, then you may want to look into refinancing your auto loan.
Pay More Than The Minimum Due
Even though lenders give you the option to pay the minimum due each month, paying only the minimum will result in more interest. More interest means more money wasted over time.
You’re better off paying as much as you can each month so that you can get out of debt as quickly as possible.
Get a Side Job
If you’re unable to make your payments or can only afford the minimum due, it may be time to start pursuing more income. Find a side job and dedicate all of the income made from it towards paying off your debts.