Have you ever looked at your credit card or business credit card bill and nearly had a heart attack? You are definitely not alone. Although each person has different debts, there are some useful universal ways of eliminating debt. Figuring out your spending habits, how you pay back your debt, and what works best for you or your business is key to helping you eliminate your debt faster. Below is a list of some of the best and most useful tips for eliminating your debt.
Stop Borrowing and Charging
Although it may seem hard, one of the best ways to help yourself eliminate debt is to stop borrowing and charging all together. Do not take out any more loans until the ones you are currently paying off are gone. Another way to stop borrowing is to not have any credit cards or limit yourself and/or company to one. If you do need a credit card, use it wisely and always pay it off on time. Everyone has their own strengths and weaknesses when it comes to spending, so play to your strengths and know what limits you need to set for yourself.
Paying Off Your Debt
Although this thought is a bit contested in the finance and business niche, most believe that paying off the smaller loans feels more rewarding mentally and therefore what is usually suggested to people. When you look at your debts and see a $6,000 one that seems impossible to pay off, but you are able to eliminate a $2,000 much faster, it’s just nice to see it go away. This can also be referred to as a ‘snowball’ effect. Paying the minimum on everything and attacking the smallest balance you have with extra money you assemble and then moving onto another loan. But, there are also many arguments that it’s best to pay off the loans and debts that have the higher interest rate. It’s all a matter of what you feel is the best thing to do.
Making a budget and a plan is one of the most important aspects of helping yourself become debt free. You can do this by either by using a program, accountant, or sitting down and doing the math for yourself. Making a budget will show you exactly how much you need to pay each month in loans, rent and utilities for an office, and more as well as how much you or your company can actually spend each month. When you know exactly what amounts of money you need to spend on necessities as well as how much you can spend on other things.
Patience is Key
For most people, being patient is the hardest thing to do when it comes to paying off debt. When you are paying off your debts, you want to see actually changes happening. But, debt reduction, especially any kind of loan reduction, is a long and slow process. Although it may not seem at first that you are making any progress or are making a difference, you are and it will start showing eventually. It helps to keep track of what you pay monthly and yearly so you know how much you have actually paid off on your loans and debts. That way, you yourself can see the progress you have actually made.
Do you have any good tips or hints on eliminating not only credit card debt, but all kinds of debt as well? We’d love to know! Leave a comment below!
Brandi Paquet is a recent graduate who is starting her writing career and paying off her student loans. In her spare time she hangs out with her cat, reads CNN Money, bakes, and keeps up on the latest financial news. The article uses some tips from CompareCards, who also provides a great Debt Payoff Calculator.