Spring cleaning your finances: Get Your Debt Under Control
This is the time of year that many people think about Spring Cleaning; they’re clearing out their closets and sprucing up their yards. Few people realize, however, that this is a great time of year to think about cleaning up their finances. One of the most important things you can do to improve your financial health this spring is to get your debt under control. Try these strategies to make this the year that you finally pay off your debt and start work towards building wealth.
Ways to Pay off Debt
1. Figure out what you owe. The first step towards getting in control of your debts is knowing how much you owe. Make a list of everything, including credit cards, auto loans, mortgages, and personal loans. Include the total amount that you owe, the interest rate, and the minimum monthly payment.
2. Figure out what you can afford to pay. If you don’t already have a budget, now is the time to make one. If you already have one, then you should know how much you can put towards debt repayment every month. This spring, take the time to figure out some ways that you can cut back in areas to free up more money for debt repayment.
3. Figure out what to pay off first. In order to really feel like you’re making progress, pay off the debts that you owe the least amount on first. Even if these don’t have the highest interest rates, paying them off will give you the motivation to work on the rest of your debt. As an added bonus, you’ll be able to use the money that you were spending on their monthly payments to pay off other loans on your list. Even better, as you pay off each debt, you might see a small improvement to your credit score.
4. Consider debt consolidation. If you’re just too overwhelmed to even begin thinking about paying off your debt, or you just can’t pay the minimums on your loans every month, it might be time to think about debt consolidation. This process will let you work with a debt counselor to combine all of your loans into a single loan with a lower interest rate and a lower monthly payment. You’ll have all of your debts paid off and you’ll be able to see real progress towards paying off this last loan.