Millions of Americans carry debt, whether that be credit card debt, student loans, medical loans, or personal loans. Unfortunately, carrying debt and loans incurs interest, which means you’ll be paying more and more the longer you carry the debt.
It might feel like you can never get out from under your debt. However, there are steps you can take to break free of your debt and achieve financial freedom.
Depending on how much you owe, you may want to consider money management debt consolidation, credit counseling, or you may be able to handle it on your own. But the first step is to create a strategy to use alongside your budgeting.
Here are a few popular strategies that work for many Americans:
Pay More Than Your Minimum Payments
If you have a decent budget and can allot the extra money, you can put more toward your payments each month than the minimum. This is a great technique for things like credit card debt, mortgages, student loans, auto loans, and other types of debt.
Remember, you’re still accruing interest while you’re making minimum payments. Paying more will not only help you pay down your debt faster, but you’ll likely spend less toward interest and more toward your principal balance.
Use a Debt Payment Program
Do you have outstanding debts or debts that have already gone to collections? Consider enrolling in a debt payment program. These programs can be especially helpful if you need help paying off debt with bad credit.
Usually, creditors allow you to make a repayment plan, especially if they’re not otherwise receiving payments. If you have an outstanding debt, you may also be able to settle the debt for less in a one lump sum. In most cases, you’ll either need the money to do so up front, or you’ll need a credit card pay off loan that has a lower interest rate than what you’d otherwise pay.
Are you interested in free money to pay off debt? Check for any local assistance programs or non-profits that help you pay off debts while you continue to make payments. Check if you can get help paying medical bills, if you qualify for student loan forgiveness, or any other way to discharge some of your debts.
Money Management Debt Consolidation
Debt consolidation is an effective strategy for paying off debt in the long-term while making one easy payment. These programs are loans to help you get out of debt.
Here’s how they work: you work with a money management company or you put all credit cards into one payment using a credit card with a competitive balance transfer plan.
Instead of making several payments, you make one larger payment to the new credit and take advantage of interest-free terms. Many of these interest-free terms only last for a set period of time, so you should plan to pay off as much debt as possible before you’ll be expected to pay interest on the remaining balance.
Use Money Management Credit Counseling Resources
If you still need help managing finances, use resources like credit counseling. Many of these services are non-profit, so they may be free or have minimal fees. These services may be able to help you create an individualized budget and plan that works for you. They’re also a great resource if you’re otherwise looking at filing for bankruptcy.