23 Apr 5 Debt Reduction Strategies That Work
Getting into debt can be so easy, but getting out of debt is often painfully difficult. If you’ve found yourself trapped in a mountain of debt, you’re likely searching for any way to pay down your balance and get out of debt. Read on to find out what strategies work for helping people get out of debt.
1. Increase Your Monthly Payments
This is possibly the most obvious way to reduce your debt, but something not everyone thinks to do when they’re drowning in debt. It’s no secret that the less you pay towards your debt balances each month, the longer it will take you to pay off your debts. Any remaining balance each month is racking up interest charges, making it harder to pay off your debts in the long run. Whenever possible, you should be putting all extra income towards making significant contributions to at least one of your outstanding balances each month.
2. Use Your Savings to Pay Down Debts
While it may not sound like a smart idea, using a portion of your savings to pay down debts with high interest rates is not something you should be afraid to do. It will help prevent you from accruing large amounts of interest on those large balances with high interest rates. Don’t empty out your savings entirely, but if you have some that you could afford to lose, you could use some of that cash to eliminate your bills.
3. Renegotiate Lower Interest Rates
Speaking of high interest rates, a way to reduce your debt is to renegotiate with your creditors in order to get a lower interest rate. If you have a solid payment history and good account standing, you’d be surprised at how willing your creditors may be to work with you. If you’ve been able to maintain a good relationship with your creditors for a while, you may be fortunate enough to qualify for a lower interest rate. With lower interest rates, you can save some money on interest payments and work to pay down your debt more easily.
4. Debt Snowball Method
The debt snowball method entails paying off your debts from smallest balance to largest balance, regardless of the interest rates. By getting rid of smaller debts you have lying around with multiple minimum payments, you can get rid of the overwhelming feeling of multiple debts. Once your smaller debts are cleared, you can focus all of your energy on tackling larger debts. Once you knock out your small debts, try to avoid taking on any new small debts so that you don’t continue the snowball process over and over again.
5. Debt Avalanche Method
With the debt avalanche method, you’ll pay off your debts starting with debts that have the highest interest rate, then moving on to debts with the lowest interest rates, regardless of debt balance. By following the debt avalanche method, you will pay less in interest, getting the most bang for your buck.
Get Help From a Debt Reduction Company
Pivotal Wealth helps ordinary people become debt free. Whether it is credit card debt or student loan debt, owing money means you’re not able to invest in yourself and build wealth. Debt robs you of financial freedom and can put you in a vicious circle of playing catch up trying to reduce your debt. We want to change that. Give us a call today.