When getting out of debt is a top goal, there are a number of things you can do to pay off your debt completely — or at least the majority of it — in 12 months or less.
Here are some debt-free suggestions and tactics to get you started:
1. Increase your debt repayment rate.
Because most credit card issuers only require you to pay roughly 2% of the outstanding balance each month, putting at least 15% of your paycheck — or income from Social Security or pensions — toward credit card debt and loans can help you pay down those commitments considerably more rapidly.
Making tiny, minimal payments means you’re accruing interest on your debt balances as each month or year passes. Paying off huge portions of your debt in a few months could save you a lot of money only on interest payments.
2. Put money aside to pay off higher obligations.
Don’t be hesitant to utilize some of your savings to pay off loans with high-interest rates. Using cash reserves to pay off debt is a wise move since it prevents interest from accruing on big balances. Although having some extra cash in your bank account may feel comforting, the truth is that those dollars aren’t really working for you – especially with today’s record low-interest rates. Don’t spend all of your savings. If you have a large sum of money, consider using some of it to pay off your debts.
3. Try to get a lower interest rate.
Negotiate a reduced interest rate with your creditors. You’ll be astonished at how many creditors are prepared to lower your interest rate based on your payment history and current account status.
You may be in a much better position to qualify for a reduced interest rate if you have maintained a strong relationship for a few years. As you pay off that debt over the course of the year, this can help you save money on interest payments.
4. Put your tax refund towards debt repayment.
While it’s tempting to spend your tax refund on a high-ticket item or a trip, it’s a better financial move to pay off part, or all, of your debt. Consider the benefits of a single lump sum debt payoff method in terms of lowering your monthly payments. Instead of enjoying the short-term delight of purchase, you’ll reap the benefits of a lower debt load over the course of the year and for years to come.
5. Make a profit by selling stuff.
Make a list of items you might be able to sell on eBay, Craigslist, or at a garage sale. You can quickly reduce your debt burden by raising some extra income by selling stuff you no longer need or are willing to part with and utilizing the money to pay off debt.
6. Think about cashing in your life insurance policy.
Cashing in your life insurance policy could be a good debt-reduction option because it allows you to pay off higher sums of debt more rapidly. If you’re drowning in debt and don’t have any beneficiaries who need to benefit from your life insurance policy, such as a husband or children, it can be a good idea to use those funds to pay off debt.
If you have term life insurance coverage, this technique isn’t applicable. It only works if you have a complete life insurance policy with a cash value. It’s also worth noting that, even if you have beneficiaries, you might be able to use some of the cash value of your whole life policy to pay off debt while still leaving some life insurance earnings to your loved ones.
7. Increase your earnings
If you’re dead set on paying off your debt this year, look for ways to boost your income and utilize that extra cash to pay off your debt as rapidly as possible. Think of ways to start making extra money for at least a few months, whether it’s through taking on a part-time job or negotiating a raise with your boss. Make debt removal a top priority.
8. Make a balance transfer on your credit card.
All of the credit card debt transfers that arrive in our mailboxes are usually torn up by the majority of us. A balance transfer, on the other hand, can help you go on a debt-reduction binge. You may remove all credit-card interest by shifting high-interest debt to a zero-percent contract that lasts about a year. This frees up cash flow, allowing you to pay off those credit card payments faster. Just make sure you read the tiny print before signing up to be sure you’re getting the advertised low rate.
9. Make use of a statute of limitations to get rid of past debt.
Some people pay off previous credit card obligations, even though they aren’t legally required to. We all desire to pay off our debts. However, if money is particularly tight and you just don’t have it, you should prioritize current payments and consider foregoing repayment of old invoices that are seven to ten years old, or even longer.
When it comes to outstanding debts, each state has its own set of restrictions. Some states prohibit debt collectors from collecting specific types of debts after a particular length of time has passed, while others limit the amount of time a creditor can sue you for an old obligation. In any case, you should check to see if the statute of limitations on an old obligation you may owe has run out. If it has passed, you can probably avoid paying it without fear of financial, legal, or credit ramifications.
For further information on how to deal with old debts, contact your state’s Attorney General or consumer protection agency for assistance and guidance on your state’s credit card debt statute of limitations.
10. Declare bankruptcy to get your credit card obligations forgiven.
Bankruptcy should only be considered as a last resort for debt relief. However, in extreme cases, such as when you have no income or entirely unmanageable credit card payments or medical bills, a Chapter 7 bankruptcy petition is appropriate to erase all credit card debt.
In conclusion
We can confidently state that the procedures and methods outlined below will assist you in resolving your debt and credit issues within a year. For more information, you can call Stepchange contact number.
