Maybe you've been going your merry way charging freely and got a rude awakening when you sat down to pay the bills. Or, you could have been hit with a crisis like a totaled car, lost job, or medical emergency. The bottom line is that you are carrying more debt than what you would like. How can you pay off your debt?
First, start operating in cash-only mode. Make friends with your checkbook or debit card. This will prevent you from amassing further debt which will negate your efforts to get ahead. And, you are likely to spend less when you pay with actual cash or a debit card that is pulling money immediately from your checking account.
One way to start making a dent in your debt is to pay the minimum on all bills except for your smallest debt. Put all of your extra money toward this smaller debt until it is paid off. Then, do the same for the next smallest debt until you have paid off all of your debts. This can give you a psychological boost by seeing progress being made relatively quickly.
Another method is to pay off your highest-interest debt first. This will save you the most money, but if your biggest debt is thousands of dollars, you will have to wait awhile to get the satisfaction of actually paying a debt off. Call your creditors and negotiate for a lower interest rate. If even one agrees to this, you will have saved money which you can put towards paying down your debts.
Research whether moving the balance of one credit card over to another credit card makes sense. A fee is often involved to do this, so make sure that your gain will be more than the fee over the period of time you expect to carry the debt.
If you have debts such as a car loan or mortgage, see if refinancing makes sense. If so, you can take the difference between your current and former payment and apply it to your other debts.
If you have a good amount of equity in your home, look into a home equity line of credit. These usually have lower interest rates than many other loan types. The caveat is that if you default on the loan, you could lose your home.
Consider selling items for which you have a loan and either buying a cheaper version or doing without. You might be able to get by without a second car for awhile or that RV that you use once per year.
By using the tips above, you should be able to start making a dent in your debt and eventually get it paid off.
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