Some ways to pay off debt are more difficult than others, but to really hit it hard, try some of these suggestions.

1. Budget it out

Unless you write a budget, you’ll just keep overspending and not having money left over to pay off debt. Starting with your income, start writing at least a basic budget that will let you see and control where your money is going. Creating a budget is an essential step in paying off debt, and once you get one, you should create a debt payment plan with some of these other tips.

2. Pay your debts with savings

Many people would think that this is crazy, but because of how compound interest works, it’s a pretty smart idea. Savings rates these days are so low that your debt will compound more interest than your savings. This means that if you keep putting money into your savings account and leave money on a credit card, you’re going to be wasting a whole lot of money.

Since you can’t ever match your savings rate and your debts’ interest rates, you should use your savings to pay off your debt. It’s a smart idea to keep a bit of money in the bank for an emergency. You don’t want to have to charge emergencies to a credit card, so it’s a good idea to have a small emergency fund.

Beyond a small emergency fund, you should really take all your money from savings and put it to your debt. This will help you pay off your debt more quickly than just about anything else if you have a hefty amount in savings.

3. Boost your income

One of the simplest ways to pay off your debt is to boost your income. You can do this by working more hours, taking a second part-time job, or renegotiating your salary. You can also do it by cutting back on your spending. Going out less often and shopping less will help you put more money toward your debt. Also, check for other ways to bring in money, including income support and tax credits.

4. Overpay your debts

Because of how compound interest works, paying more than you owe on your debts each month is one of the most effective ways to pay down debt. Since you’re paying off the principle sooner, you’ll pay less interest over time and you’ll pay off your debt sooner. Any time you can, you should overpay on your debt payments, even if it’s by just a few pounds a month.

5. Use a home equity loan

A home equity loan is basically increasing your mortgage. If you have equity built up in your home, you can use this type of loan to pay off your higher interest debt. You can’t use this option unless you actually have equity built up in your home, though.

If you do have some equity in your home, this can be a really effective way to reduce the number of debts you have. You won’t, of course, actually be reducing your debt as much as you’ll be reducing the amount you pay as a mortgage has a lower interest rate than most other debts.

All loans carry certain risks, but a home equity loan may carry even more risks. With this type of loan, you could lose your home if you defaulted on payments, just like you would if you couldn’t pay your mortgage.

6. Make a debt snowball

One of the best ways to pay off debt is to make a debt snowball. Basically, you’ll focus on one of your debts at a time. This can help you pay off debt more quickly and save on interest payments.

Pick one debt to pay off first, either your smallest debt or the one with the highest interest rate. Pay the minimums on all of your debts but that one, and dump all the extra money you can get into the first debt. When that one is done, you’ll take the extra money and the minimum payment from the first debt, adding it to the payments for the second debt. With every debt that you pay off, you’ll have more money to put toward your other debts.

Using debt reduction programs on your computer can help you see just how this snowball process will work for you.

7. Speak with your creditors

You may be surprised at how much you can achieve by talking to your creditors. For the most part, these companies would rather get your full payments than take you to court or watch your file for bankruptcy. As soon as you have a problem paying off your debts, you should call your creditors.

Different creditors will offer different options to help you out. Some will lower your monthly payment. It will take longer to pay off your debt this way, but the payments will be more manageable. You’ll end up paying more in interest, but you’ll have an easier time working your payments into your budget.

You may also be able to lower the interest rate on your loans, which will reduce both your monthly payment and the total that you’ll pay over time. This is probably better for you, since you won’t end up paying as much money over time.

If you have documentation that you can’t pay your debts, your debtors may freeze your interest for a bit. They can knock down your monthly payments a bit and let you pay just on principle for a while.

8. Use a low rate credit card

Instead of consolidating your debt through a debt management company can be a good option, but transferring credit card debt can help, too. You can basically get one credit card with a low interest rate, and then transfer balances from your higher interest cards onto it. You’ll probably find several different offers for balance transfer systems that will give you a low interest rate for a while.

Find the card with the lowest interest rate for the longest period of time. When you transfer your balances, pay the new card off as quickly as possible. Also, don’t use your old cards or use the new card for any random charges. If you’ll have trouble staying out of more credit card debt, you should close up the old accounts and cut up the old cards.

Before you start doing this, you should read about the good and bad points of credit card consolidation.

9. Talk to a debt management company

If you really feel like you’re drowning in debt, one possible solution is to talk with a debt management company (DMC). This should be one of your last resorts, though.

Basically, a DMC will give you a debt consolidation loan, which is one big loan that pays off all your other loans. Instead of paying several payments for different debts, you’ll make one payment to the DMC each month. Usually your payment will be lower, and you might get a better interest rate than you would with some credit cards.

10. Go bankrupt

This is your absolute last option, and you shouldn’t turn to it unless you have no other way to pay off your debt. When you file for bankruptcy, the courts will claim your assets – which might include your car and home – to pay off your debts. This can be a little scary, and you should seriously weigh up your options before you step in this direction.

Tags: 10 Ways To Pay Off Debt, Easy Ways To Pay Off Debt, Ways To Pay Off Debt

One of the largest challenges that many people face when trying to pay off debt is finding money to apply towards their debts. In order to pay off your debt, you have to pay more than the minimum payment, but this can be hard to do when you’re having trouble just making ends meet each month.

So where can you find additional money to apply to your credit card debts each month? Here are various ideas:

Tax refund: Do you typically get a large tax refund each year? If you do, then you can apply part or all of the refund to your debts. In addition, you should adjust your withholding so that less taxes are withheld from each check; you’ll get a smaller income tax refund, but you’ll have more money to apply towards your debt payments each month. The last thing you want to do is give Uncle Sam an interest free loan when you have high interest credit cards!

Savings: Nobody wants to cash out their savings account to pay off credit card debt, but when you have credit cards that are costing you 18% or more in interest each month and your savings are only earning 4% (or less), it just gets sense to use some of your savings to get rid of that nasty credit card debt.

Bonuses, raises and overtime: Anytime you get a raise, bonus or earn overtime, you should use at least a portion of that money to pay towards your debt. Since this is “extra” money that you didn’t have before, you shouldn’t miss the money that you put towards your debt.

Part time or temporary work: If you’re really in a debt bind, consider getting a part time, seasonal or part-time job. It doesn’t have to be forever, just long enough to pay off or at least make a dent in your debt.

Sell things: Another option is to sell things to raise money. Have a yard sale or sell items no longer used on eBay. Sell books that you no longer read on Amazon or Half.com. You’ll be surprised at how much some items will sell for on an online auction!

Borrow from family and friends: Everyone hates to ask family and friends for money, but if you’re in over your head and you have family members in a position to help, this is an option you shouldn’t ignore. If it helps, you can draw up a written agreement so that each party knows what to expect, and there’s no chance for disagreements or hard feelings down the road.

Borrow against your home equity: This is not an option to take lightly. Yes, you can reduce the interest you are paying on your debts significantly by taking out a home equity loan, but remember that your home is at risk if you are unable to make the payments for any reason. Choose this option only if you are 110% sure that you can continue to make your payments, even in the event of a job loss or other emergency.

Reduce spending: Although named last, this is probably the first strategy you should take to find extra money to pay off debts. You should review your spending to see if there are any areas that you can cut back on to generate additional cash to be used towards your debt. Some typical areas that can be cut back on, at least temporarily, to help pay off debt include food (both groceries and eating out), amusement (gym memberships, magazine subscriptions, cable, internet, trips to the book store) and personal care (haircuts, clothing, housekeeping, etc.).

These are just a few suggestions on how you can find money to help pay down your debts quicker. There are hundreds of other ways you can find money to use towards your debt if you are motivated to search for them.

Tags: Find Money To Pay Off Debt, How To Pay Off Debt, Pay Off Debt