Tips For Paying Off Debt

Having debt is like carrying around a heavy weight on your shoulders. It can slow us down a huge amount and it is incredibly stressful to manage. However, there are ways that you can handle your debt and get them paid off once and for all.

1. List debts by interest rate

The first step to paying off your debts is to decide which one you want to pay off first. If you think about all the credit cards and accounts you have open, list them by interest rate and see how much you owe for each. At this point you will be able to transfer credit from a high interest card to a lower interest one, and then you can focus on paying off your debts with the larger interest first. This will mean that the high interest doesn’t keep building up and it leaves you free to focus on the rest of your debt.

2. Have an emergency savings fund

In life there is never a certainty that everything will be hunky dory. There will come a time in your life when something will happen which puts your financial stability in jeopardy. It could be that the company you work for goes into administration, you lose your job or something else. What happens to your when this happens? You need to make sure that you have an emergency fund to use if things ever go wrong, because it will be the only money you have to fall back on.

3. Make minimum monthly payments

Before you start looking into bill consolidation, remember that you not have to make the minimum payments each month if you are struggling. If you have always made the full payments you might not realise that there is a minimum, but a long as you stick to this you will not fall behind too much and you can easily make the money back the next month.

4. Create a budget

You will never manage to keep a stable financial situation if you do not give yourself a budget to stick to during the year. Each month you should take some time to look through your bank statement and see what payments you have made that are unnecessary and what you can cut down on in the following month. Set yourself a budget for food shopping to cut down on overspending and plan all of your spending and saving prior to the new month beginning. It will give you a guideline to follow and make it much easier to stay on top of making payments and saving money. You may also wish to check out credit cards that have the best grocery spending rewards.

5. Start laddering your debts

Once you have listed all of your debts by interest rate, you can start paying them off one at a time. Don’t start paying off everything at once because you will soon find it too overwhelming and land yourself further in debt. Start with the highest interest and once that is paid, move down the the second highest. Work like this until you reach the bottom of the pile and have paid off all of your debt.