5 Effective Debt Elimination Techniques
Debt can be a ball and chain that will start to get in the way of your life in many different ways. Try renting an apartment or taking out a loan for a new business and your outstanding bills and poor credit score will be evidence of that ball and chain. This is why taking measures to eliminate debt is so important. Most importantly,¬†eliminating debt¬†will remove that fiscal ball and chain that weighs so many of us down. When it comes down to it, there are many methods you can take to eliminate and reduce your debt load. Here are five effective debt elimination techniques.
- Take on the most challenging debt first. Out of all the forms of debt,¬†credit card debt¬†is often the most intense and difficult to pay back. Credit cards usually come with high interest rates, which is why the debt is so hard to get out of. Ideally, you want to pay down this debt with the largest amount liquid capital possible, because you want to compensate for the interest fees. From your credit card debt, you can work your way down to the easiest debts to pay off.
- Make debt repayment a serious part of your financial planning. It is also important to make eliminating debt a serious part of your life. Before you make any large purchases or financial decisions, you want to make sure your debts are cleared. Until you are in the clear, you can start spending a little more liberally, but until then, you want to make clearing your debt a priority. If you don’t, you’ll keep putting it off and putting yourself further into debt.
- Consolidate your debts. There are many companies that will take all of your debts and pay them back for you. Once they have bought all your debts, they consolidate them into one package. From there, you can start paying back your debts to one institution – not several. This can make it easier and more effective to conquer all your outstanding balances – from credit card debt to school loans. While the interest rate may be slightly higher, it will make paying back your loans a lot more realistic.
- Create back up cash at the same time that you are paying off your loans. One of the biggest reasons why people have trouble paying off their loans is because they don’t have backup capital. Basically, they can’t pay off their loans, because there are no savings to cover other important expenses. Ideally, you want to have a few months of income saved up and put away – just in case you get close to the red.
- Ask the collection agency or institution to reduce the debt. Another effective way to reduce your debt is to ask for the debt to be reduced. Simply negotiating with your creditor may lead to a lower debt load – even if it is only a few hundred dollars here and there, it can really help in the grand scheme of things.