The notion of paying off debts and living a debt-free life is easier said than done. Regardless of good intentions, it seems as if unexpected expenses always pop up when you’re low on cash, wherein you need to use a credit card. Still, never let debt defeat you. There are many ways to payoff high interest credit cards debts. If you own a home, there is always the option of a home equity loan or mortgage refinance, which let’s you consolidate the debt. Even if you don’t own a home, there are plenty of options available to you.
Here are four ways to payoff debts, and remain debt-free.
1. Identify Reasons for Paying Off Debts
If you don’t have a clear reason as to why you want to payoff debt, you may never become debt free. Many say, “I want to eliminate my debt,” but never take the first step. If you have a goal, you’re more likely to work hard and achieve the ultimate objective. For example, perhaps you want to buy a home, lower your monthly expenses, or simplify your life. Once you’ve established or identified the goal, put in down in writing and post it throughout your home. If your main vice is impulse shopping, post your goal in your wallet. It will serve as a little reminder each time you reach for the credit card.
2. Make Bigger Monthly Payments
Everyone knows that paying the minimum payment will not quickly reduce debts. With this said, make every effort to double or triple your monthly payments. If you come across a lump sum of cash or extra money, put this toward your debts. Some people get into the habit of only paying the minimum, which barely reduces the interest. In this situation, the credit card or loan balance never decreases, but rather remains the same or increases! Even if you can’t afford to pay much, something is better than nothing. Start small and increase payments by $5, $10, or $15. If you really want to payoff debts fast, get a side hustle or part-time job. Don’t spend the extra money on clothes, shoes, etc. Use the money to reduce your debts.
3. Stop Using Credit!
You can’t payoff debt if you continually add new charges. For example, it doesn’t make sense to make a $100 payment on a credit card, and then charge $150 the following month. If lack of control keeps you in debt – cut up the credit cards. Don’t cancel the credit cards because this shortens your credit history and lowers your score. Cutting the credit card in half makes it impossible to use, and puts you one step closer toward your goal.