- Negotiate the interest rates
Many people do not know this, but you can actually call your lender and negotiate your loan interest rate. This is especially effective for those people who pay their bills on time. Just pick your phone and make the call; you will be surprised at how much you can save with a lower interest rate.
Do this for all your loans, primarily credit card debts. If you do not have the confidence, you can use Truebill to review your purchase history and negotiate your bills.
- Debt Consolidation
If you have several loans and are looking at debt consolidation as an option, you can approach your bank and see if they are willing to consolidate all your loans. It will only be beneficial to you if they do it at a lower interest rate. Apart from making it easier for your to manage your debt, you can save on interest and avoid adding any new debt while paying off the consolidation loan.
It would be best to remember that debt consolidation is another debt, so do not abscond your duty to make payments. Apply the same methods as before, by making payments on time and always paying more than the minimum to pay it off faster.
After consolidating their debts, some people resume their previous spending habits, which will eventually leave them in a deeper debt hole than before, so address all the underlying problems, primarily your spending habits, if you want to be debt-free.
Read Also: How to Consolidate Debt
Ensure that you are also setting money aside for emergencies or any other unplanned expenses because you aim to pay off debt and stay debt-free.
Mistakes to Avoid When Paying Off Debts
When you are looking to pay off your debts in the fastest way possible, you should avoid making these mistakes
- Maintaining your old spending habits
If you have a habit of relying on payday loans and credit cards, you have to stop it because they will only make it harder for you to dig yourself out of debt. So, it would help if you changed your lifestyle habits by creating a budget that is not strict as you adjust to the changes.
- Not asking for assistance
The majority of people in debt operate with the mentality of “I did this alone; I must get out of it alone.” This is because they are afraid of the embarrassment, forgetting that we all make mistakes, and the willingness to correct the errors makes us different.
So, the first step is acceptance and then act on it, make a call to your lender, and request a reduced interest rate. If you feel that it is hard to stop borrowing, you can attend counseling, which will help you avoid future debt.
- Making only the minimum payment
The minimum payment helps you avoid penalties, but it does not make a huge difference to your principal. So, if you have access to more funds, make more than the minimum payment and reduce the principal, reducing the interest.
Bottom Line
A debt-free life is easy and peaceful, and who does not want such a life. Start your journey towards a debt-free life by using the tips above to pay off your debts. It does not matter what type of loan you have; if you are committed and have a solid payment plan, slowly by slowly, you’ll be able to clear all your debt
