Get out of Debt Pay off your Debt Cut Back on Unnecessary Expenses Pay down Debt

During those tough economic times, everyone tries to make ends meet on a tight budget. Even those who haven’t lost their jobs or haven’t been asked to take  a pay cut have reached the painful conclusion that they can no longer spend what they used to. Learning how to get out of debt is of high importance.

Top 5 ways to get out of debt

1. Try negotiating with your creditors

Contact your creditors and try negotiating with them. Suggest an amount you can pay per month. If they agree to it, it may take longer for you to get out of debt, but at least you will know that you pay an amount you can really afford. If they don’t accept the amount you offer, ask them to  at least lower the interest. If you have been a good customer so far, in all probability they will help you out one way or the other. Make sure you are civil and polite to make things easier for you. Keep in mind that your creditors prefer working things out with you instead of asking help from debt collectors. Essentially, you both want the same thing, so it will be good for both of you to cooperate smoothly.

2. Pay more than minimum payment

When paying just minimum payment for your loans and credit cards, essentially you pay just for the balance, not for the interest. As a result,  it will take a long while before you are able to pay off your debt. What you need to do to speed up the process, is to start paying more than minimum payment, as often as possible. If you do not succeed for a month, arrange to pay more the next month.

3. Debt consolidation loan

A way to lower the interest in your payments is by transferring the balance from a credit card with high interest  to a loan with low interest. Such a loan is a home equity loan. Consult a bank counselor to find a debt consolidation loan tailored to your specific needs and budget.

4. Cut back on unnecessary expenses

Another thing you can do to get out of debt is to cut back on unnecessary expenses. Instead of spending about $20 a day on coffee and food, it is best to brew your own coffee and pack your own snack and lunch. Consider a more affordable cable package which will include only the channels you regularly watch. If you do not use your home phone much, there is no reason to keep paying for it. Look for an affordable cell phone plan that will allow free calling within your network, bigger allowance of minutes or text messages, as well as lower charges during weekends. Take some time to compare prices and benefits, and pick the service that combines the most. Save money by using public transportation instead of your car, on a daily basis.

5. Pay only in cash

When trying to pay down  debt, there is no point in using credit cards. Not only is this not going to help you pay down debt, but it will actually increase debt. With credit cards it is easy to overspend, as you are not asked to pay in full for every purchase you make. When you pay in cash though, you keep better track of your spending. Get rid of all your credit cards, as well as other convenience cards, such as department store cards.

The above 5 tips will help you pay off your debt effectively and on time. It is necessary to incorporate them in your daily routine, in order to become part of your life.