Paying Off Debt Doesn’t Need To Be a Terrible Ordeal

Getting rid of your debt is, to a large extent, all about how you think about it as opposed to your actual actions.

We all simply want the debt and the headache associated with it to disappear.

Because of this, it’s easy to make decisions where we try to cut corners.

It’s also easy to fall off track and add more debt after we’ve spent months paying it down. Without the correct mental approach of patience, it’s quite likely that you’ll end up falling off your original plan for paying off debt.

With that said, let’s look into some solid tips for getting out of debt...

Establishing an emergency fund is an important aspect to this subject. As you’re setting aside some of your budget toward debt freedom, be sure to invest some of that income over into a cash emergency fund.

With an emergency fund in place, any life “emergency”, such as the car breaking down, the refrigerator needing fixing, or those roof repairs your home needs, won’t simply roll a big amount of debt back onto your credit cards.

Don’t make the mistake that many folks make when it comes to targeting the wrong debts first.

If you have tax deductible debt, such as your home mortgage, why pay that down while your car loan and credit cards (that you can’t deduct) are still costing you month after month. Hit the non-tax deductible interest first and then you can get to paying down your mortgage.

As you get started on your plan to get out of debt, why not call your creditors and negotiate your interest rates down? Some will do this while some won’t, but it’s worth the effort.

Sometimes, they’ll close your account when doing this. As long as they report it on your credit report as something like “closed at account holder’s request”, rather than at “issuer’s request”, then why not? You’ve lowered your interest payments and can’t use the card again to rack up more debt.

If you have room in your home’s equity and would like to apply a large sum immediately to your credit card, student loan and car loan debt, why not consider a home equity loan? This could jump start your chance to pay off these debts and turn that interest into the tax deductible variety at tax time.

If a loan isn’t possible, then use the debt stacking method, where you pay the smallest debt off first, then apply its payment on to your next smallest debt. Keep doing this until you have a very large payment being applied to your last and largest debt (probably your home).

Paying off debt doesn’t need to be a tough task. Build a plan, work that plan, and you’ll discover that you’re out of debt in no time.

Change your life,

Matt Zavadil

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