Don’t become crippled by debt.

It’s no secret that debt can ruin a person’s life. With mounting bills and poor credit scores, it’s no wonder stress, anxiety, and feelings of hopelessness tend to intensify and only make the problem worse.

If this sounds familiar, know that you’re not alone. We see first-hand how common and crippling debt can be which is why we’ve compiled our top 5 tips to pay it down.

1. Pay More than the Minimum

If you owe money on a single credit card, multiple credit cards or a line of credit make sure you are paying more than the minimum monthly payment. This is especially true for anyone that intends to use a card and carry a balance on it.

That’s because the majority of minimum payments go toward the interest fees rather than the overall balance on the bill. So, even if it’s just $50 or $100 more than the minimum, this amount will chip away at the principal and prevent you from never-ending bills.

2. Consider a Consolidation Loan

Consolidating debt is another option for those that are struggling to keep up with payments. A consolidation loan from a bank or credit union merges debt to one creditor. Meaning, there will only be one payment and one interest rate to keep track of. In turn, making budgeting easier since you won’t have to worry about fluctuations in rates, or keeping up with different due dates.

3. Use the Snowball Effect

The ‘snowball effect’ is a method used to tackle debt. This method aims to pay off multiple lines of credit quickly by going after the ‘smallest’ balance first and moving up from there.

To do this, you will need to track and tally how much you owe and to who. Once that’s figured out, only the minimum payments should be paid on the ‘largest debts’, with all the extra money being used to pay off the ‘smaller debts.’

4. Bring in More Income

Although it may seem obvious to up your income if you want to pay off debt, it is often a tactic that is overlooked. This is because people think it will be difficult, time-consuming, or stressful to increase their earnings.

But, increasing earnings does not need to be hard. If you are able to, consider taking on more hours at your current job, or discussing the possibility of a pay raise. Even ‘part-time’ or contract work in your field is a great option to bring in more pay. Note that this is something that you won’t have to do forever, instead think of it as a short-term solution to aggressively work down the debt.

5. Create and Follow a Spending Plan

Budgeting is a critical part of paying off debt. Without it, you won’t know how much money you have left at the end of the month to go towards repayment. This can cause you to over-indulge thought the month on unnecessary items and lose track of your goals.

To prevent this from happening, you will need to figure out how much money you bring in during a month and how much you owe. Once you subtract the totals, the remaining balance will be how much you have left to go toward your debt.

Of course, this can be tricky to do which is why we suggest getting the help of a professional. Someone like us at A.P. Accounting & Tax Services can help you with a plan, regardless of how much debt you have.

If you’d be interested in learning more, or knowing what services would help you, give us a call at 407-328-5001.

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