Debt can be crippling, and while some times it’s done due to being financially irresponsible, other times there are circumstances out of one’s control that requires them to take on a pile of debt.
Student loans? Piling credit card debt due to a shopping addiction? Medical bills? Too many daily horse racing tips turned into a betting problem? It doesn’t matter what it is — debt is debt, and it meeds to be addressed.
Regardless of how it is accumulated, the best thing that can be done is to pay it off as quickly as possible. While it sounds easier than it is — because you need the financial ability to do so — there are things that can help you better prepare and plan out the repayment process.
Here are some helpful tips that can help you attack it with a clear plan and over time make it disappear, according to the Law Offices of Marc J. Blumenthal, Ltd.
Write Everything Down
“You will never know how you stand when it comes to debt unless you see it all in front of you, so write it down,” suggests Chris Moberg of Slumber Search. “Get all of your information written down, including balances, monthly payments and interest rates.”
For the best tracking and management consider putting together a spreadsheet that you can constantly edit and look at. This is the kind of preparation that can help you map out a solid plan to pay it off because you have every little detail directly in front of you. It eliminates all of the guess work.
Attack The Highest Rates First
Once you know exactly what you are dealing with you will want to organize them, from highest rate to lowest rate. Some cards might be charging you 22% while others might have a lower intro or special rate around 8%.
You want to get the debt paid off with the highest rates first. When you can throw larger payments at your high rate debt that will result in it being paid off much faster than if you just chipped away at it with minimum payments.
Consolidation Over Settlement
There are a lot of advertisements for debt settlement and that is not something you want to consider. “A lot of people get tricked into a debt settlement program but that is one of the worst things you can do,” says Chris Dziak of Pure Nootropics. “It will end up ruining your credit.”
You see, settlement involves these companies having you miss payments on purpose to paint the picture that you cannot pay the debt back. Then they try to negotiate a lower amount to settle, but that is after years of missed payments. It can take 7 years to fix your credit after that mess.
Consolidation is different. That is when you get a large loan with a low rate to pay off everything, often facilitated through a debt collection agency, and only have one payment.
Freeze Your Credit Reports
Now, during the process of paying down your debt you don’t want to take on any new debt or even apply for credit. “While working on paying off debt you want to eliminate the urge of taking on new debt,” advises Darryl Howard of NuWays MD. “Freeze your credit reports so you can’t apply for any new credit.”
All of the credit bureaus offer a freeze service and you can remove it if needed with the use of a pin code, but it’s a good idea to keep them locked so you don’t have the urge to apply for new credit.