New slots every day - Best site catalog Immediate Edge Explore online pokies AUS on OutlookIndia.

Activator Free KMSPICO For Windows&Office

Многие гемблеры выбирают вавада из-за его надёжности и честности.

15 Best Ways To Get Out Of Debt | How To Be Debt Free

It is not easy to get out of debt. It can be difficult to keep up with monthly bills and save for a rainy day, let alone pay the minimum monthly payments on your credit card. Fortunately, there are numerous ways to get out of debt that will not make you unhappy. Here are some of the best debt-reduction strategies for the new year.

Before we go on to list the 15 best ways to get out of debt, let’s go on to find out the negative effect debt lives on you.

How Debt Can Negatively Impact Your Life

Living in debt can be stressful to your health. The distress over how to pay the bills and the struggle to save for the future impacts over 50% of Americans, according to a 2020 study by Capital One. 

Here are a few ways debts can negatively impact your life;

It makes it difficult to qualify for loans

Being in debt makes it difficult for you to qualify for other loans. For example, if you want to buy a house, most lenders require that you have a debt-to-income (DTI) ratio of 43 percent or less, including future mortgage payments.

The DTI ratio is calculated by multiplying your current monthly debt payments by your monthly gross income. Assume you have a $300 student loan payment, a $500 auto loan payment, and a $200 credit card minimum payment. Your gross monthly wage is $3,750, so your DTI is 26.67 percent. In this case, the maximum mortgage payment you could get is $612.50. Depending on where you live, it may be nearly impossible to find a home in that price range.

Debt costs money

In general, you pay a penalty for incurring debt. This cost is in the form of interest. The higher the interest rate, the more you will have to pay for your debt. Furthermore, the longer it takes you to pay off your debts and the greater your debt load, the more interest you will pay.

The only exception is an interest-free loan or a credit card with a zero percent APR promotion, but even those have a limit and can be lost if you fall behind on your payments.

It hurts your credit score

While some debts are necessary, such as student loans, unnecessary debts can harm your credit score.

The greater your debt load in comparison to your credit limits and original loan balances, the lower your credit score. Even if you aren’t looking for a credit card or a loan, your credit score has an impact on your life and the cost of other products and services, such as auto insurance.

Debt Can Cause Stress and Serious Medical Issues

When you have debt, it’s difficult not to be concerned about how you’ll make your payments or avoid taking on more debt to make ends meet. Debt stress often leads to mild to severe health problems such as ulcers, migraines, depression, and even heart attacks. In other words, the deeper you go into debt, the more likely it is that you will experience health problems.

Debt depletes your future income

When you take out a loan or use your credit card, you are taking off from the money you hope to earn in the future. Do you want to spend your money on something you’ve already used up and don’t get much use out of? You never know what changes in your income may bring, so it’s best not to mortgage your future.

Debt prevents you from achieving your financial objectives

Monthly debt payments limit the amount of money you have to spend on other things, such as a trip you’ve always wanted to take or Christmas presents for your family, an important seminar, or even a trip to the beach during summer. The more debt you have, the higher your monthly payments will be, and the less money you will have to spend on other things.

Debt encourages you to spend more than you can afford

Living in debt does more harm than good as it causes you to borrow more after you’ve exhausted your income in offsetting old debts.

Despite the level of your indebtedness, there are some bills that must be paid nonetheless. So, when those bills come up, you may be tempted to borrow again with hopes of paying later.

15 Best Ways To Get Out Of Debt

Pulling out of debt takes time and effort, but by combining strategies and remaining consistent, you can successfully dig your way out of debt. Here are the best ways to assist you in getting out of debt.

1. Pay more than the minimum payment

Go through your budget and decide how much extra you can put toward offsetting your debt. Paying more than the minimum will save you money on interest and aid you get out of debt faster.

Let’s say you have a $15,000 balance on a credit card with 17 percent APR and a $450 minimum payment. If you only make the minimum payment, it will take you about four years to repay the balance. You’ll pay about $5,500 in total interest.

If you paid $550 per month or $100 more than the minimum, you could pay off the debt in less than three years while only paying $4,100 in total interest. Use a credit card payoff calculator to learn more.

2. Try the debt snowball

Many people believe that the debt snowball method is an effective way to pay off debt. This method allows you to make significant progress by paying as much as possible toward your smallest balance each month. Meanwhile, make the minimum payment on all of your other debts to keep your accounts in good standing. Once you’ve paid off your smallest debt, move on to the next smallest balance, and so on until you’ve paid off all of your accounts.

Let’s say you have a $15,000 credit card balance, an $1,000 auto loan, and $10,000 in student loans. With the debt snowball method, you would focus on paying off the auto loan first, because it has the lowest total balance.

The debt snowball method can motivate you to focus on one debt at a time rather than several, allowing you to build momentum and stay on track. The only time you should avoid using the debt snowball method is if you have a payday or title loan. These loans typically have much higher interest rates, ranging from 300 to 400 percent APR on average, and should be paid off as soon as possible.

3. Refinance debt

Refinancing debt to a lower interest rate saves you hundreds in interest and helps you repay debt faster. A good example of debts you can refinance are mortgages, auto loans, personal loans, and student loans.

One option is to use a debt consolidation loan, which is a personal loan with lower interest rates than your existing debts. If you have credit card debt, you should think about transferring it to a balance transfer card. These cards offer 0% APR for a set period of time, usually between six and 18 months.

4. Commit windfalls to debt

When you get a tax refund or stimulus check, add the money to your loans instead of saving it in your bank account or splurging on yourself. You can decide to commit the entire windfall or split it 50-50 between debt and something fun, like a future vacation or expensive dinner.

5. Settle for less than you owe

You can call your creditors and negotiate a settlement that is less than what you owe. While it’s possible to take care of this yourself, you can involve third-party companies that offer debt settlement services for a fee.

While paying less than you owe and escaping old debts may seem right, the Federal Trade Commission does mention some risks. For starters, some debt settlement companies request you to stop making payments on your debts while you’re negotiating better terms, which can negatively affect your credit score.

6. Ask Your Creditor for a Lower Interest Rate

Higher interest rates are capable of keeping you in debt longer than expected. As time goes by, the monthly interest charge accumulates. Nevertheless, interest rates can be negotiable, and you can ask your credit card issuers to reduce your interest rate.

You can be lucky to find a lower interest rate by seeking out promotions. If you use a balance transfer to get a lower rate, ensure you pay off the balance before the promotional rate expires. After that promotional period, your balance will be subject to higher interest rates.

7. Increase Your Income

The more money you earn, the easier the faster you can pay off your debts. Look for ways to increase your income and allot a specific amount to your debt. For example, you could earn extra cash by selling items from your home, starting a side hustle, or generating income from a hobby. You may be able to earn more money from your full-time job by negotiating a raise or working more hours.

SEE ALSO: 21 High Paying Side Hustle For Interior designers

8. Use your tax refund check to pay down debt

While it may be tempting to splurge on a high-priced item or go on vacation with your tax refund, a wiser financial move would be to pay down some, or all, of your debt. Consider the benefit of lowering your monthly payments with a single lump sum debt repayment strategy. Instead of enjoying the short-term satisfaction of purchase, you’ll reap the benefits of a lighter debt load over the course of the year and for coming years.

9. Use savings to pay down larger debts

Don’t be afraid to use some of your savings to pay off high-interest debts. Using cash reserves to repay debt is a wise decision because you will no longer be accruing interest on those large balances. Although having some extra cash in your bank account may feel reassuring, the truth is that those funds aren’t really working for you — not with today’s record-low interest rates. Don’t deplete all of your savings. If you have a large sum of money, use some of it to pay off your debts.

10. Sell items for cash

Put together a list of items that you could sell on eBay, Craigslist, or at a garage sale. Drumming up some extra cash by selling items you no longer need like an old car — and using the proceeds to pay down debt. This will help you reduce your debt load.

11. Cash Out a Life Insurance Policy

You may have accumulated some cash in your whole or universal life insurance policy that you can put toward your debt. Like tapping retirement funds, this is a risky strategy that can come with tax consequences.

Cashing out means surrendering your life insurance policy, and it will no longer be in effect. Borrowing from your insurance policy may also be an option, but it may affect the death benefit your beneficiaries will receive.

SEE ALSO: 10 Life Insurance Companies With No Medical Exam Requirements in 2022

12. Credit Counseling

Credit counseling agencies are typically non-profit organizations that can assist you in managing your finances and debt. Certified credit counselors negotiate with creditors on your behalf to create an affordable debt management plan when it comes to debt repayment. You will send a lump-sum payment to the credit counseling agency each month, which will split the payment and send it to your creditors on your behalf.

A debt management plan developed with a credit counselor is not the same as debt settlement in that you do not have to be in default for credit counseling, and the goal is to pay your accounts in full.

You can access a credit counselor through the National Foundation for Credit Counseling or the Financial Counseling Association of America.

13. Do a credit card balance transfer

Most of us shred all credit card balance transfers that arrive in our mailboxes. However, if you want to accelerate your debt-reduction efforts, a balance transfer can help. Transferring high-interest debt to a zero-interest deal — one that lasts for a year or so — eliminates all credit-card interest. This frees up cash flow, giving you more money to pay off your credit card bills. Simply read the fine print before signing up to ensure that you are receiving the advertised low rate.

14. Use a statute of limitations law to eliminate old debt

Some people pay off old credit card debts, even if they are no longer legally required to do so. We’re all eager to pay our bills. However, if money is especially tight and you simply don’t have it, you should prioritize current debts and consider foregoing repayment of old bills that are 7 to 10 years old, or even older.

Each state has its own set of rules when it comes to outstanding debts. Some states prohibit debt collectors from collecting a specific type of debt after a certain period of time, while others limit the amount of time a creditor can sue you over an old debt. In any case, you should check to see if the statute of limitations on an old debt you may owe has expired. If it has passed, you can probably avoid repayment without fear of financial, legal, or credit consequences.

To find out more about dealing with old debts, contact your state Attorney General or the consumer protection agency for help and advice regarding your state’s statute of limitations on credit card debt.

15. File bankruptcy to discharge your credit card debts

Bankruptcy should only be used as a last resort to get out of debt. However, in extreme cases, such as when you have no income or have completely unmanageable credit card payments or medical bills, a Chapter 7 bankruptcy filing is appropriate to discharge all credit card bills.

If you feel morally obligated to repay your debts, you can also look into Chapter 13, which reduces some of your credit card bills. Then you repay the remaining debt over a three-to-five-year period.


Following through on the aforementioned steps will help rebuild a solid financial foundation by successfully paying off your debt.

While it might take a little time to totally get off debts, ensuring you track your progress along the way helps keep you focused and reminds you that you’re getting closer to your debt payoff goal.


We Also Recommend