Will I Ever be Debt-Free? Six Tricks to Get You on the Path to a Debt-Free Life

These days, as soon as you graduate from high school creditors begin to send you loads of credit card offers that fill up your mailbox. To celebrate that you are now an adult and can secure credit, you may activate one or more of these cards. Unfortunately, at a young age it is not likely that you know how damaging and expensive it can be to run up your credit card balances and have a high debt-to-income ratio. You are essentially doomed from the beginning unless you have learned proper credit etiquette to stay out of debt.

Fast forward several years and you are still paying down the debt that has accumulated in the form of credit cards, furniture, vehicles, student loans, and more. As you make your payments, very little goes towards the principal. This fact is what makes you feel like you will never be debt-free and still be able to live a satisfying life. If you have been paying things off for years and don’t want to enter your 50s or 60s with tons of debt hanging over your head, consider the following tricks to get you on the path to a debt-free life:

Track Your Spending and Learn about your Spending Patterns

The only way to develop a spending plan so that you can reduce your debt is to track your spending over a period of 2 to 3 months. You should be sure to write down your balance at payday, keep your receipts for the pay period, and then see where you are spending money unnecessarily and when you tend to be more budget-conscious. Spending patterns change throughout the month. When you first get paid, you might be much more open to buying that expensive meal or paying for entertainment. At the end of the month, you might need to cut back on luxuries. If you see the trends, you will be able to target where the change needs to happen.

Cut Down on Your Monthly Bills

You might think that you have no options when it comes to saving money, but there are always options. You should lay all of your bills out on the table and then start finding ways to save. If you have auto insurance, call your agent and ask for discounts. If you can’t save there, start comparison shopping to find lower premiums. If you have a cell phone, call the company and see if you can save money by changing phones or plan options. If it is not possible, opt for a cheaper plan through a bargain-priced provider. It will take a little creativity, but you can cut several hundred dollars from your bills and use the money you save to pay down debts.

Consider a Balance Transfer Promotion

Just because you are in debt does not mean you do not have decent credit. If you have a decent credit score of 680 or higher, banks are just waiting to give you better rates. They may not just have good rates, they may also have an introductory offer where you will have a period of 0% interest on the debt that you transfer over. If you can pay off that debt during the period, you can have thousands in interest charges. The fastest way to pay off thousands in credit card debt is to find a bank willing to give you 0% on balance transfers. Use the money you save from lowering your monthly bills to make payments and you will be debt free faster than you imagined.

Get a Personal Loan

If you do not want to activate another credit card, you could apply for a personal loan. Personal collateral-free loans are becoming a popular option as the economy gets better and lenders loosen their reigns. Personal loans have lower interest than the average credit card so you could pay 10% on the debt instead of 20%. If you continue to pay the same amount you were paying on your credit cards, you will be paying down the principal faster and paying less interest at the same time.

Leave Your Cards At Home As You Pay Down Debt

It is very tempting to use a credit card if it is in your wallet. If you know you are paying down debt, the key is not to create more. Spending impulsively is a big problem when credit is concerned. Studies show that 34 percent of consumers will use a credit card instead of the bank card or cash if it is there. Try to avoid doing this and just leave the cards that are off limits at home.

Set a Plan to Pay More than the Minimum Amount Due

Credit can be so dangerous because your bill only requires you to pay a very small percentage of the balance. If you could pay $50 instead of paying something like $500, why would you pay more? The reason is that every time you make a minimum payment you are letting the interest pile up. The creditors want you to do this. Make a plan to pay more than the minimums due on all of your debt. You can save thousands in interest, payoff the debt faster, improve your credit, and eventually get debt-free.

It might not seem like there is an end in sight, but being debt-free before retirement is possible. Be responsible and consider these tips as you get on the path to a life free of financial stress and pressure. The information for this article was provided by the cash advance professionals at Power Finance Texas.

Tags: Consumer spending, Credit card, Credit score, Debt

Category: Debt