Are you ready to conquer your debt? Reducing and ultimately eliminating your debt is the best way to raise your credit score. Outstanding debt is a major factor in determining you score, so it stands to reason that the less of it you have, the better off you’ll be. Also, reducing debt makes it less likely you’ll miss payments, which is another huge contributor.
Paying off debt isn’t easy, but with some thought and planning, you can do it. Here are some steps to get you started.
- Identify your debts. Make a list of who you owe, how much is outstanding, the interest rate you’re being charged, and the minimum monthly payment. Sort this either by lowest balance or highest interest rate. Then you can pay the minimum on everything but the first on your list. For the first item, give it all you’ve got until it’s gone. Then tackle the next one.
- Negotiate. Try calling your creditors to see if you can negotiate what you owe or your interest rate. Anything helps, and it’s generally worth the effort.
- Consider consolidation. Many credit cards offer low-interest balance transfer options. These often come with fees, but they can save you plenty on interest charges. Watch out for major interest rate hikes after the introductory period. You may also want to look into a consolidation loan. Sometimes just paying one less creditor can make the difference in your budget.
- Cut back on spending. A budget is a must to get spending under control. Find ways to trim your budget. Cut back on eating out, use coupons, give up cable – anything that gets your payments down while you focus on debt elimination. This isn’t a revolutionary tip, but it does work.
- Sell what you don’t need. Summer is a great time for yard sales, so host one! Sell what you don’t need and put that cash straight toward your debt. No yard? Check out online sales tools designed to let you sell things either locally or by shipping them.
Debt often builds up over time, so give yourself time to pay it off. Patience is the key, and this could take a while. So, buckle up and start saving!
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