17 ways to eliminate debt: Part 2
Use these tips to manage your debt.
In the previously published article, “17 Signs That You Have Too Much Debt”, readers were given a list of indicators to analyze their current debt. If your household has any outstanding debt balances, you are not alone. It is possible to eliminate debt and improve quality of life. In the second part of this series, the first eight of seventeen tips are provided to help you become debt-free.
- Calculate the total amount of debt owed. It is time to acknowledge, not ignore, your financial situation. Total all of your credit card bills, loans, mortgages, etc. Make note of the minimum payment amount, interest charges and the creditor for each bill.
- Pay at least the minimum amount due. Paying the minimum amount due is the slowest way to pay off debt. It could take decades, depending on the balance and interest rate. However, this method is preferable to making no payment at all.
- Pay your bills on time. Making late payments or no payments will increase the balance due, even if no additional purchases are made. Late payment penalties and interest rate increases will be added to the debt.
- Develop a spending plan. Record the amount of money that is spent and earned. Do this for 30 days and you will have a snapshot of your financial situation. This realistic view will help you determine where expenses can be reduced or eliminated.
- Stop creating debt. Stop using credit cards and purchase items with cash. Save for future expenditures if there is not enough cash available to buy now.
- Start an emergency fund. Find enough money in your spending plan to save regularly. An emergency fund allows the use of cash, instead of credit, to cover an emergency situation.
- Ask for a lower rate. Contact your creditor to see if you can negotiate a lower interest rate or get part of your debt forgiven.
- Avoid situations that trigger impulse buying. Take a different route to work to avoid making that routine visit to the coffee shop. Block emails from your favorite retailers to keep them out of your mailbox.
Getting out of debt is not an easy task but is worth the effort. Employing the strategies listed in this article will help you build a plan of success. Michigan State University Extension educators urge you to read the next installment of this 3 part series on Debt. In the meantime, please visit mimoneyhealth.org for credit and debt management tips.
Other Articles in this series: