As per the current debt stats, it can be said with some level of surety that debt is an infliction that affects all adults across various demographics. If you are looking to get out of debt and fast, then you need to prioritize it more than any other thing in your life. You can follow our 10-step guide to get rid of debt completely or the major part of it and within a year.
Read on to know more.
Increase the debt repayment percentage for every month
If you are looking to pay off your debt within a year or so, then you need to be aggressive with the way you payback. Allocate around 15% of your monthly income to counteract the debts. You can leverage the pension amounts or the social security income for this purpose as well. There is a reason as to why credit card services offer you to pay the minimum 2% of the entire outstanding amount per month. However, if you make large chunks of payment every month, you will surely pay-off faster and avoid the interest as well.
Pay the more substantial debts with the savings
If you are thinking about how to manage the high-interest rate lines of credit better, look no further than your savings. It is an excellent idea to use a portion of the savings to take the load of the monthly paycheck. Yes, we do agree that the savings offer a certain comfort level. But, ever since the interest rates for savings accounts have gone down, there is no way of utilizing it. Make it work for you to eliminate a significant chunk of the unpaid bills.
Negotiate the lower interest rate
If the high-interest rates are bothering you, then keep in mind that you can always call your creditor to negotiate a better deal. This is probably the most overlooked tip in this list. Some creditors will reduce your interest rate and take the risk if your account standing and payment history are good. This is why it is crucial to maintain good relations with your creditors.
Utilizing the tax return check
Most of us keep aside the tax return check for a vacation or a fancy/costly item. But it makes sense to use this option to pay-off on a debt. This single payment can make a surefire dent in the net debt accrued by your previous purchases and spending habits. Lighten your debt load today and lead a happier life.
Have you thought of selling items?
Here is a way to make quick cash legally. You can put together a garage sale or use any online seller for selling items that you no longer need. Prepare a list and carefully go over the items that you can sell for a considerable amount. Use the proceeds to pay-off a portion of the debt.
Utilize the life insurance
If none of the above seems like a viable option in your case, you can always cash in the life insurance. This will enable you to pay-off a large chunk of the debt faster than any other option on this list. But utilize this option only if all hope is lost and you are drowning in debt. However, you need to keep in mind two important considerations before going through with this option. The first the presence of a beneficiary – spouse or children, and the second is about the type of the insurance policy. If your policy is a term life insurance policy, this strategy is a no-go for you.
You can make more money
If you are looking to pay off all your debt within a year, then you should ideally look into the avenues for making more. Increase your income to pay off the debts faster. Take up a part-time job or negotiate a raise. Any temporary solution for a few months will help you to overcome the debt.
Credit card balance transfer
Credit card balance transfers can help in reducing the debt accrued on various credit cards. You can transfer all the debt of a high-interest credit card to a low or zero interest credit card to ease the payments. This will help you to organize all your debt and enable you to make/manage payments better. However, do keep in mind that the zero/low interest is only applicable for a fixed period, so read the offer documents carefully.
Eliminate old debt with the statute of limitation
You are not legally obligated to pay the bills on old debts. You should always focus on the current debts and the most pressing ones. Stop paying the bills that are for debts accrued 7-10 years ago. Read up on the statute of limitations for the state of your residence. There are legislations in place whereby a debt collector is not permitted to collect beyond a specified time period. Make sure if the statute of limitation has passed on an old debt and quite simple forego making any payments on the bills. You can contact the Office of the Attorney General or the Consumer Protection Agency for all the details and necessary information regarding the state and federal laws.
Filing for bankruptcy
This is the last option to get rid of all debt. But this option is usually required under extreme conditions when an individual is unable to make any payments and is without any viable source of income. In the case of unmanageable debt and medical bills filing for bankruptcy is the only option. However, filing for bankruptcy will leave a permanent stain on the credit score, which will make it difficult for you to gain access to any of the lines of credit in the future. You can repay your debt if you feel you are morally obligated after filing for bankruptcy within a period of 3-5 years.
That concludes our list of the top ten tips to get rid of debt within a year. Leverage online resources extensively to find out more about which tip works the best in your case. All the best!