The right game plan for you depends on your unique situation and financial goals. Take these suggestions and pay back what you owe.
Debt is money owed to an entity or person that must be paid off by a deadline. Mortgage, student, car, and credit card balances are types of debt.
At some point in your life, you will likely have debt. But would you know if you have too much obligation? On average, your annual debt payments (including bank loans, credit cards, and car payments) should ideally be no more than 20 percent of your annual take-home income. (This 20 percent debt guideline does not include rent or mortgage costs, which can be 30 percent on their own).
There are things you can do to delete that debt, especially when getting out of debt is a priority (or at least paying off most of it) in 12 months or less.
Here are six (6) tips and strategies to get you started on a debt-free life:
- Crush up your debt repayment percentage. Setting at least 15 percent of your paycheck (or pension or income from Social Security) toward loans and credit card debt will help you pay those obligations much more quickly. This is because most credit card companies only ask you to spend about 2 percent of the outstanding monthly balance. Making minimum payments means that your debt balances collect interest each month or year. Paying off big chunks of your debt within a few months could save you a significant amount on interest payments.
- Use savings to pay down more enormous debts. Do not be afraid to use a section of your savings to pay off high-interest rate debts you incurred. Using cash reserves for debt repayment is a wise decision because you will stop accruing interest on those significant balances. Do not deplete your savings entirely, though. Use some funds to eliminate your bills if you are sitting on a heap of cash.
- Negotiate for a lower interest rate. Call your creditors (a bank or financial institution) to negotiate a lower interest rate. You will be surprised how many will be willing to reduce your interest rate based on your account standing and payment history.
- Make more money. If you are determined to pay off that debt within the year, you should look for ways to increase your income. Use that extra cash to pay down debt as quickly as possible. Whether taking on a part-time job or negotiating a raise with your boss, think of strategies to earn more cash for at least a few months and make debt elimination your high priority.
- Use a statute of law limitations to delete old debt. Some individuals pay off old credit card debts (ancient ones) even when they are no longer legally urged to do so. You all want to repay your bills. But if times are incredibly tight and you do not have the funds, you should center on present debts and consider forgoing repayment of old accounts that are 7 to 10 years old or older. For more information about dealing with debts (old or new), contact the Law Offices of Ronald E. Stadtmueller. Our experts can help you Get Out of Debt with Law Offices in San Diego. Here is the acumen why you should choose us:
- Fast Resolution & Real Debt Relief
- Free Consultation (Virtual and Phone)
- Certified Bankruptcy Law Specialist
- Current Chapter 7 Bankruptcy Trustee
- Former Chapter 13 Bankruptcy Trustee
- 30 Years of Legal Experience
- Responsive, Thorough, Understanding
- A+ Rating with the Better Business Bureau
- Military & Senior Discounts & Payment Plans
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6. Do a credit card balance transfer. Most people typically tear up all those credit card balance transfers that arrive in their mailboxes. However, a balance transfer can help if you want to go on a tear with your debt reduction efforts. You eliminate all credit-card interest by transferring high-rate debt to a zero percent deal that lasts for 12 months or so. That frees up money flow, giving you added money to eliminate those credit card bills.
Closing Remarks
Saving is complex, and life often throws unexpected expenses at people. Life is beautiful and should be enjoyed, and it should not be recommended to live like a Spartan. Adhering to a plan will allow you to save for retirement and cover your expenses, all while doing the activities that make you happy.
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