9 Sure-Fire Ways to Pay Off Debt

Debt can be so overwhelming, it leads many people to run away from it instead of dealing with it head on. Letting debt go and get out of control only means you are putting yourself at even more financial risk and a bigger nightmare to tackle down the road since debt does not go away.

Here are 9 sure-fire tactics for paying down and eliminating your debts:

Contact Your Creditors Now
You may already be getting the phone calls and the letters threatening further action on your unpaid debts. Now it is your turn to get in control of your finances. Contact the creditors you owe and let them know you are working to pay back your debts. Ask for their assistance directly and do not feel forced into doing anything you are not able to do – such as make a lump sum payment right away. Instead, see if you can work on lowering interest rates on credit cards to help with payments.

Get Outside Intervention
If you don’t think you can handle the negotiations on your own, seek the advice and assistance of debt consolidation or debt settlement companies, who can work to lower the rates and fees being charged on your accounts, giving you access to more reasonable payment terms. Deciding on which type of company will help you best is a personal decision.

Cut Costs Now
Even if you are working with a company to handle your debts, you also need to take some new direction with your personal finances. You need to cut expenses where you can by first tracking what you are spending and where. Cutting both big and small costs can help you find some more usable income than you might have realized. Create a reasonable budget and stick with it to help limit spending and increase savings and debt payments.

Pay High Interest Before High Balance
If you want to reduce your debts faster, prioritize your debts by the highest interest rates versus the highest balances. Accruing interest charges as you pay off your debts makes the whole process very slow.

Pay More the Minimums
If you are working on your own to battle debt, include in your budget more than the minimum amounts on payments due. Even adding $20 a month can make a big difference on how fast you pay down your debts.

Snowballing Payments
The snowball concept concerning debt essentially means you focus your efforts and additional cash paying down one debt at a time while still making minimums on the rest. Once that first debt is paid in full, its payment amount plus the regular payment goes towards the next debt and so on, until all of your debts have been paid in full.

Go Low Interest
There are many credit card companies that offer no or low interest credit cards for an introductory time period that are suitable for balance transfers. You transfer all of your higher interest credit card balances to one low or no interest card and work to pay off your balances before the introductory period is over. This can work if you have a plan to pay the balance before the normal interest, which is generally much higher than you can afford, becomes effective.

Borrow From Friends/Family
Mixing money with friends and family is not always the best idea. If you do have someone who is willing and able to help you satisfy your debts, you need to consider it just as you would accepting a loan from a bank. There should be an agreement in writing and a serious commitment to making on-time payments to repay the loan in the time alloted. Otherwise you risk losing key relationships over your debts.

Stop Spending
It is virtually pointless to start working hard on paying off debts when you continue to spend irresponsibly. In addition to your family’s budget, you also need to work on changing your financial habits for the good. You may need to take a refresher course on how to handle money. All your learning and financially-stabilizing improvements will help create some security and eliminate debt at the same time.