Maybe you’ve been shopping a bit too much lately, or perhaps your hours have been cut and you’ve been charging more to your credit cards than usual so that you don’t deplete your savings account. Or maybe you had to have some emergency home repairs done. Whatever the reason, if you’ve become burdened with a large amount of debt, here’s how to work on paying it off.
Pay off your higher interest rate credit cards first
Prioritize your cards in terms of their interest rates. Check the rate on each card, and pay off the one with the highest rate first by allocating more of your cash to that card (while, of course, still making minimum payments on the other ones).
Consolidate your debts
If you have a line of credit or qualify for one, pay off all your debt using this credit source, as it carries a much lower interest rate. Then focus on reducing that one line of credit balance each month. Do not use your now zero-balance credit cards to start shopping and spending all over again!
Set up automatic payments from your bank account
Use online banking to set up automatic payments for a set amount to be paid toward your credit card or line of credit each payday. When you set payments to be automatic, the transactions will occur without your realizing it, making it somehow less painful mentally. Don’t forget about these automatic payments, though, or you may risk your account being overdrawn.
Find ways to make more money
Go through your possessions, and sell items you don’t want or need anymore on such websites as Craigslist and Kijiji, or hold a yard sale to sell off many items all at once. Do you have some designer goods in your closet that you can part with? Head to a consignment shop and see what your vintage handbag can fetch you. Or if your schedule permits, look into getting a part-time job so you can earn extra cash. Remember, though, to earmark this extra cash for paying off debt — don’t use it to buy something that caught your eye on Craigslist!