Debt is remarkably like a snowball. Once it gets started, it just gets bigger and bigger and harder to carry. And the more you have, the more you need. Don’t let your debt take over your life. Get in there and take care of things.
1. Don’t Live Above Your Means
At some point, America stopped being about realizing your dreams and started being about having the biggest, fanciest, sparkliest, fastest of everything. 45 million Americans live below the poverty line. Not all of them realize it. Don’t be one of those people.
Know how much money you make, and work with what you have. If you can’t afford a $100,000 sports car, don’t get one. Get what you can afford. The lower you keep your debt, the more money you can save, and the better quality you’ll be able to afford.
2. Shop Around
If you’re already in debt and you need something that is going to require a loan, and therefore more debt, don’t just take the first option. More debt means higher interest rates (the snowball effect in action again). If you have a lot of debt already, it can be difficult to get a good deal when you ask for more loans. That tends to make you more likely to jump on one when it’s offered. Don’t do that. Check with multiple places, and don’t be afraid to bargain for a better deal.
3. Stop Adding Debt
If you don’t have to have it, don’t get it. If you just keep adding to it, you’re never going to get out from under it. You can even get rid of existing debt sometimes — sell your car to pay off the loan you owe on it, and buy something less expensive. If you have ten maxed-out credit cards, you don’t need another one to max out. Learn to say no to things you can’t afford.
There are lots of companies out there that can help you get your debt down to one manageable payment instead of twenty. If you have a lot of credit cards, you’re making a lot of credit card payments. Keep an eye out for offers that allow you to transfer your balances to one account — often they’ll be interest-free for a year. But be careful — if the new card’s limit is less than the amounts you’re trying to transfer, you’re going to wind up with another payment, instead of one, consolidated payment.
5. Don’t Do the Minimum
When you have extra money or if you’re paying less than you can reasonably afford to pay without bleeding yourself dry, pay a little extra. Every month you have to pay means more money added to the total amount of the loan in interest. If you pay off that loan more quickly, you wind up paying less in the long run, even if it’s more in the short term.
6. Watch Your Credit Score
As your credit score improves, so do your options. You can contact credit card and loan companies about lowering your interest rate as you start to get things paid down. That makes your long-term debt smaller, and may even lower your monthly payment.
On the other hand, a better credit score means credit based companies are going to trust you more — and they’re going to be trying to get you to sign up for more credit cards or loans. If you know it’s coming, you can be ready to combat it and not get yourself stuck with another set of payments.
7. Hide Your Credit Cards
If you have a lot of credit cards, it’s almost painfully easy to spend money. And as one fills up, you can just switch to another one. Eventually, you get to a point where you’re making a payment just so you can use that little bit of extra room to buy something else. Hide them from yourself. Give them to someone you can trust to help you make good decisions for when you actually need them. At the very least, stop carrying them around with you. Don’t make it easy to spend more money than you have. Because when you stop spending money, you start getting out of debt.