Debt…
For many people, this word can spark fear and stress about their future. But it doesn’t have to be this way! There are many effective strategies to help mitigate the effects of debt on your everyday life.
And don’t worry, you don’t have to go through this process alone! The Credit Union of Denver is here to help you on every step of your journey towards a debt-free future. In the meantime, here are some tools to help you pay off your high interest debt faster.
1. Make A Budget and Stick to It
The first step is to figure out roughly how much money you spend a month, and how much you have available to put towards your debt payments. To do so, gather up all your expenses from the last 30 days. This can include bills for utilities and insurance, and other regular expenses like entertainment, groceries, and clothing. Then, add all these expenses up, and subtract that total from your monthly income. Take some time with this process and see if there are places where you can change your spending habits to redirect some of this money towards your debt balances.
There are also many mobile apps designed to help you track your spending. If you want a simple, consistent view of your budgeting efforts, these apps can be great tools. No matter how you track it, the important part is that you will begin to see the impact of your budgeting month to month, and thus slowly be able to eat away at your debt more than before.
2. Consolidate Your Debts
One option to help you pay off your debt is to consolidate it. This process generally entails taking out another loan with a lower interest rate so that you can utilize it to pay off your current loans that have higher interest rates, like credit cards.
A great option for debt consolidation is to take out a personal loan or a second mortgage. A personal loan may be a good option as an unsecured loan, with rates lower than some credit cards. Alternatively, a second mortgage is a secured loan (using your home as collateral) that generally comes with a lower interest rate compared to many other loan options.
3. Stop Borrowing Excessively
To successfully pay off your debt, it’s crucial that you stop adding more to it. By accruing unnecessary debt, not only will you owe more money in the long run, but your debt will also take longer to pay off.
Make sure you are only using the money you have. Strictly pay for your present expenses with cash or a debit card to ensure that you aren’t getting stuck with additional interest fees from tools such as credit cards.
4. Consider Alternative Options
While you work to pay off your debt, there are options to help you lower your interest rate. For example, our auto equity loans use your car as collateral, meaning that it will typically have lower interest rates compared to credit cards.
With a lower interest rate, you will have more equity for the things that you need. If you have any questions, give us a call at 303.234.1700, we are here to support you!
5. Celebrate Your Progress
Even taking the first step towards trying to tackle your debt is a huge milestone! While it’ll be important to stick to this budget to see results, make sure to give yourself some grace when you need it too. Nobody can be perfect all the time, but consistently trying is the most important thing.
There are plenty of options available to help you successfully handle your debt, but these tips are a great place to start. Finding effective tools that fit your needs will make all the difference! Knowing what options are out there will ensure the best course of action to help you reach your goals. Remember, every journey begins with a single step, and taking control of your debt is a powerful one towards a brighter financial future.