There are many reasons that people find themselves in debt. If could be a job layoff, a new baby, a new home or simply poor money management. If you are also in over your head or owe out more than you are comfortable with, there are ways to reduce it and get back on track.
Refinancing your mortgage
The fastest way to get out of debt is to pay as much off your debt without interest added. Luckily there are ways to do this. If you own a home and have lived there for more than 10 years and haven’t borrowed against it, to probably have some equity in it. The interest rates are pretty low, so now would be a great time to save money across the board and reduce your debt. If you refinance at a lower interest rate your monthly payments will become less. On top of that, you will also get money at the closing that you can use to pay off things like your outstanding credit cards, school loans, and car payments. This will help to free up a lot of money from your tight budget. As an added bonus, with most of your debt gone, except for your home, you can arrange to add extra monies to your mortgage payment to pay it off faster.
Transferring balances on credit cards
If you owe a lot of credit card debt, chances are pretty good that you are also wasting a lot of money each month on high-interest fees. In order to pay your cards off sooner rather than later, you need to apply more towards the principal balance each month. The good news is that if your credit is still in good standing, you can apply for a new credit card that allows you to transfer the balance of other cards. Companies like CreditSoup know about many different credit cards and which ones are the best for your situation. Like the fact that many credit card companies, in order to entice you to sign on, offer a period of time, generally 6 months to a year, interest-free. By transferring balances from credit cards with high-interest rates you can save hundreds each month and pay them off quickly.
Taking on a second job
If your credit is not in good standing and refinancing or transferring credit card debt is not an option, you can still work your way out of debt slowly. One way to reduce the amount of time is to take on a second job. By adding even a couple hundred dollars a week you can add $800.00 a month that you can use solely for the purpose of reducing debt. This means that you apply every penny to credit cards and loans, starting with the one with the highest interest rate. Depending on the amount of debt you have you can get back on track in a few months or a year or two. Plus, by paying more and on time, your credit score will slowly improve.
Reducing daily expenses
Sometimes, even with a second job the money coming in just isn’t enough to cover all the bills. If this is your current dilemma you need to dig deep and get resourceful. If you have cable services, which most people do, cut it back to basic service and rent movies. If you have a cell phone or several in your home, shop around and get the lowest price available. The same goes for your gas and electric, shop around. Many states now allow you to switch to another supplier, take advantage of this. Before heading off to the grocery store check the flyers to see which supermarket is offering the best prices on the things you need.
If you’re in debt, you’re not alone. But, it’s up to you to turn the situation around and make the necessary changes in your life to reduce your debt. Once you have it under control, keep it there. Buy only what you can afford. If you reach for a credit card to make daily purchases you’re not living within your means.