If your debt is keeping you up at night, it’s time you made a plan to eliminate it. Don’t spend time beating yourself up about having debt–80 percent of Americans do. As long as you’re taking the steps to work on it, you’re doing the right thing. Eliminating debt isn’t just about paying it off, though. You have to make a committed effort to control spending so you don’t start the debt cycle over. Here are some tips to pay off your debt and restructure spending in the future.
Always Try To Pay More Than the Minimum Payment
If the minimum payment is all you can afford right now, then keep paying it. However, if you do have room in your budget to pay more–you should. The recommended amount is 15 percent of your paycheck. This will help you save on accruing interest costs and pay off your debt much faster.
Ask for a Lower Interest Rate
It might seem like an outlandish request, but you truly don’t know if creditors will say yes until you pose the question. Give your credit card company a call and explain the situation–especially if you’re finding yourself unable to pay more than the monthly payment requirement. If you have made your payments on time, creditors are sometimes willing to negotiate for a lower rate, which will make paying off your card much easier and faster.
Do a Balance Transfer
If you can’t make more than the minimum payment, and your creditor said no to lowering the interest rate, this is your best bet. Balance transfer credit cards allow you to pay off your balance without interest for a set period of time (usually a year). However, sometimes there is an upfront fee. After that, the interest is often higher than average, so only choose this option if you think you can pay off your balance within a year.
Track Your Spending
Once you have a plan to pay off your debt, it’s imperative that you closely track your spending so you’re not relying on credit cards. Track all of your expenditures for a month and see exactly where your money is going. You can do this in a spreadsheet, or using a free budget tracking app like Mint. You might be surprised once you have every purchase and bill in front of you how much you’re spending on certain things. Evaluate places you can make cuts so you’re not overspending. After you’ve tracked your spending for a month, make a budget yourself or use an automated one from an app and stick to it as best as you can.
Get Help From a Pro
There is absolutely no shame in admitting you need more guidance when it comes to finances. The National Foundation for Credit Counseling is a nonprofit that specializes in helping people get out of debt through personalized counseling sessions. They can help you make a budget, transfer debt, and offer many other resources. Though there is some cost to the services (between $25 and $75 per month depending on the agency, the amount of debt and regulations in your state) it’s nominal in comparison to the interest your card is building per month.