Best tips to become debt free.

The average family has over $9,000 in credit card debt. They also pay a large amount of interest every month on their debt. Add in outstanding medical debt, and many families are truly struggling. Find three of the best tips below from a leading publication to becoming debt free.

If people paid off their debts, the savings on their interest would amount to hundreds of dollars per year, and thousands of dollars over a few years. Remember, it is not just credit card debt. Department store revolving credit cards, cars loans, student loans and other non-secured debt add to the bills people pay every month. And many people are just one minor illness, temporary job loss, or a variety of small steps away from declaring bankruptcy.

Reduce Your Interest Rates

People are paying thousands of dollars per year in interest on credit cards and medical bills. The interest rate on credit card debt are incredibly, and can be as high as 20%, and sometimes higher if you have a poor credit rating.  Find out what interest rate you’re paying now on your bills and more than likely you will be shocked.

 

 

 

Pay Off Debts

While easier said than done, paying off your credit card debts (and medical once cards are paid off) needs to be your highest priority. And the easiest way to do this is to liv beneath your means. To help become debt free, a leading publication offers these tips, and used them properly.

If your credit scores and rating are in “decent shape”, explore transferring your high-interest rate balances to a lower rate credit card account. Find the best credit cards. Most credit card companies and banks offer a very low interest rate for three or six months, and some offer zero interest rate deals, as a come-on to get your business with them.

The next step, after the low interest rate grace period expires, beware that the interest rate you pay will increase to the normal amount for your situation, and the rate could therefore double or triple. Now, therefore the next step and really the key to making this strategy work is that you must be willing to, and also able to, move your outstanding balances to a another new low introductory rate card when the special rate expires on the first card. So keep transferring your balance. If you don’t move your unpaid balance to a lower interest rate, then you’ll save no money and lose money from the higher rates.

The last step, and part of the tip to pay off debt, is discipline. In other words you must take the money saved by the temporary lower interest rates and low payment associated with them and pay down the principal on your credit cards. Just keep repeating this process of transferring your balance and paying it down until your credit card debt is paid off in full.

Use a Debt Management Plan

Many credit card issuers, including GE Money and Wells Fargo among others, are providing families relief from debt management plans (DMP). A debt management plan can reduce your interest rate, extend your payment terms, or even lower your principal. read more on assistance from debt management plans.

Pay More Principal on Your Debts Every Month

To accelerate your the time it takes to eliminate your credit card debts, pay a little more money. For example, if you were to make the minimum monthly payment on your bills it takes much longer. Say you have $10,000 in debt and are paying a 21% interest rate, it would take about 16 years and 10 months to pay that credit card debt off at $180 per month. If you increase your monthly payment amount by $40 per month, to only $220, you could have that same debt paid off in 7 years and 8 months. That is less that half the time if you add just $40 per month to your payment. It doesn’t sound too unrealistic. In addition, you’d save thousands of dollars in interest!

Saving $40 per month to do this is not that difficult. Skip buying the coffee from Starbucks or somewhere else, brown bag your lunch to work a couple times per week, give up smoking, eat out less. Do whatever it takes to pay extra on your debt as the impact is huge!

Consolidate Your Credit Card Debt

You can become debt free and save big on interest costs by consolidating your debt. Debt consolidation is when you gather all of your smaller accounts, but high-interest debt, and consolidate or put it into one big pile. Once that is done, you take out one large personal loan to pay it down. The major benefit to debt consolidation is that the new loan you take out will almost always have a lower interest rate that any of the smaller, individual debts. More on debt and bill consolidation.

The lower interest rate on the new loan will make for a lower monthly payment on your bill, and as a result of this lower payment, the debt holder can make additional monthly payments, thus paying off the outstanding medical or credit card debt sooner. As the example above shows, there are major advantages to paying off debt sooner, and remember the goal is to ultimately become debt free.

These three tips from a top publication are only several of the numerous ways that can help speed up the process of your debt reduction. Never give up the goal, and dream, of becoming debt free! Do not rely on government bailouts to help.

Learn about credit card debt forgiveness.

Many banks and lenders are beginning to be more open and more willing to forgive credit card debt and to help consumers in other ways. Communication is one of the keys. Learn more on how to get out of credit card debt.

Explore payday loan laws

Most state government have implemented laws and regulations to help people get out of debt, in particular payday loan loans and debts. The interest on these types of loans can be in the hundreds of percents, and many people have turned to these salary advance loans in difficult times. Click here to learn about the laws for your state.

At the end of the day, it is important to eliminate debt and the money you spend each and every month on the interest for your debts. Reducing those monthly payments can free up your money for other types of bills and expenses that you may have in your life. Following these tips and advice to get out of debt.