Did you know that the average American household owes more than $16,000 in debt? That’s a lot of money, especially considering that many people don’t have a stockpile of savings to fall back on if they need it. Unpaid debts can have serious consequences on your personal and financial future. Taking action sooner rather than later can help protect your credit score while also reducing the time it takes to pay them off substantially.
Change the Way You Pay Your Bills
If you’re in debt and paying the minimum amount each month, it will take you a very long time (if ever) to pay it off. If this is the case, you may consider changing how you pay your bills. Consider getting a loan from a local bank or credit union to repay your debt.
If you have an excellent credit score, you may qualify for a lower interest rate than what you currently pay on your debt. This will save you money in the long run because you’ll pay down your debt faster. Another option is to change your payment method.
Many credit card companies allow you to change your payment method to make one larger payment per month instead of multiple smaller ones. This may not eliminate your debt, but it will help you chip away at it faster.
Negotiate With Your Creditors
This option isn’t ideal for everyone, but it’s worth a shot if you’re in over your head with debt. You might be able to negotiate with your creditors to lower the amount you owe. However, not all of them are open to this type of proposal, so try to stay optimistic. You might be surprised by the results you get.
If you’re nearing the point where you cannot pay back your creditors, it may make sense to negotiate a partial payment or ask for more time to pay them back. This approach is often referred to as debt restructuring. This is a good option if you can’t pay back the full amount because of a significant change in your financial situation.
Set up a Payment Plan
Let’s say you’ve already fallen behind on your payments, and there’s no negotiating your way out of this one. It’s best to get in front of the situation by contacting your creditors. Creditors prefer to be paid back, and they may be willing to work with you to set up a payment plan.
It’s important to make payments on time to avoid damaging your credit score, but doing so without taking the time to catch up on your back payments can be very difficult. If you have a steady income, you may want to consider using a debt consolidation loan to repay your debts. This will allow you to make one monthly payment instead of multiple payments with various creditors.
Get a Cash Advance From Your Credit Card
If you’ve already incurred debt, you may want to consider taking a cash advance from your credit card. This will ensure you have enough money to cover your expenses, but you must be careful to pay the money back promptly. Credit card companies often charge high-interest rates (around 25% on average) and charge additional fees when you use your card in this manner.
If you don’t pay the money back within a few weeks, the interest rates will skyrocket, and you’ll be stuck with high monthly payments for a long time. This is not a good idea if you want to get out of debt quickly. This will make it more difficult to pay off your debt since you’ll be paying extra monthly interest.
Installment Loans
Credit cards are sometimes your only option when you need a quick cash advance. A better option for quick cash is an online loan or one from a local installment lender. These lenders will give you a fast loan based on your monthly income and credit score. You’ll have a set amount of time to pay the money back (usually a few months).
You’ll want to be careful to pay the loan back on time, but this is a much better option than taking out a cash advance on your credit card. Your credit score will take a big hit if you use your credit card as a short-term loan.
Stop Using Credit Cards
Credit cards are a convenient way to make purchases and build your credit score. Unfortunately, many people have difficulty controlling their spending when using credit cards. If you have a hard time resisting the urge to spend, you may want to stop using credit cards for the time being.
This will eliminate the temptation to go into debt, and it will help you build a healthy financial foundation. If you’re already in debt, you should stop using your credit cards completely until you’ve repaid your debt. This will prevent you from making unnecessary purchases and digging yourself deeper into debt.
Conclusion
If you’re already in debt, there are ways to get out of it, but it requires a level of commitment and organization that may be lacking in your life right now. A good start is to ensure all of your bills are paid on time every month. You should also have an emergency fund saved up to a cash reserve in case an unexpected expense arises.
Another good example is going for a lender online. This will help broaden your options, just make sure the source is a trusted one. If you follow these guidelines, you’ll be in a much better position to get out of debt on time. You can also use a debt reduction calculator to see how long it will take you to pay off your debt based on your current payment plan.
