7 Tips to Quickly Eliminate Debt
Posted
on Tuesday, March 26, 2024
in
Financial Education
One key ingredient to saving more money is to eliminate debt. Here are seven tips to help you pay off your debts faster.
- Use your tax refund. A new year brings a new tax season. If you are expecting to receive a tax refund in 2024, consider putting all or a portion of that refund toward a debt you want to eliminate this year.
Put salary increases toward debt. If you receive a salary increase in 2024, use part of that to increase your monthly debt payments in order to pay them off faster.- Put credit cards away. If you have excessive credit card debt, continuing to use your credit cards will only exacerbate the issue. Put them somewhere safe until your credit card debt is in a more manageable position.
- Cut the clutter. If your home is full of items you no longer need or use, get rid of them by selling them at a garage sale or online on a site such as Facebook Marketplace. Use the proceeds from those sales to pay down debts.
- Switch monthly payments to biweekly. A small change you can make to help pay off debts faster is to switch your bills’ payment schedule from monthly to biweekly. Schedule half of the amount to be paid every two weeks, and you’ll end up making 13 months of payments in a year rather than 12.
- Consolidate debt under a lower interest rate. If you are paying off several debts at various interest rates, you may want to consider consolidating them under one manageable interest rate. Doing so will reduce the number of bills to keep track of, while also reducing the interest rate on your loans.
- Create a spending plan. If you feel like you’re getting buried by your debts, you may want to consider implementing a more detailed spending plan. Spending plans can include the avalanche method – making the minimum payment on all lower interest rate debts and using excess funds toward the debt with the highest interest rate. You could use the snowball method – using excess funds to pay off the smallest debt first, then re-allocating that payment to next smallest until all your debts are eliminated. These spending plans can help you eliminate debts faster while giving you flexibility when unexpected expenses arise.
More Information
For more information about how to reduce debt, contact United Bank & Trust at (641) 753-5900 or at [email protected].