If you’re like most people, you want to put the year 2020 behind you. To say the year was a challenge is an understatement. With the lockdown, many hard-working families fell upon difficult financial times. If you were like many, you probably relied on your credit cards more, causing you to accumulate larger balances.
Paying Down Debt
Large amounts of debt can leave you cash-poor. Every paycheck you receive goes straight to paying your bills. This creates a snowball effect that can cause late or missed payments. Taking charge of your finances and reducing your debt is in your best interest. One way to achieve this is to take out a consolidation loan. This will lower the amount you pay out each month and reduce accumulated interest. Companies such as Harrison Funding provide these types of loans to help you get back on track.
Know What You Owe
The first step to reducing your debt is to identify the total amount you owe. Gather your credit card bills and write down your balances. This will allow you to see the total sum. If you prefer not to take out a personal loan to merge your credit card debt, there are other options. You can contact each credit card provider to see if you can lower the current interest rate. If that’s not possible, some companies offer a temporary lower monthly payment because of a hardship. Applying for a credit card that allows balance transfers is another option worth considering. This will put a freeze on additional interest accruals for a period of a year or more and lower the amount you are obligated to pay each month for credit card debt.
Going It Alone
If none of the above is available, you still have another option. You can pay off the debt on your own. It’s a slower process, however, it is also the most gratifying. Take the card with the highest interest rate or the one with the lowest balance and apply more each month to that card. Once you pay it off, you move onto the next one and continue the process until you pay off the last one.
Finding Room in Your Budget
In order to pay off your debt, you need to find ways to reduce the cost of your monthly financial obligations. Cutting out unnecessary spending, such as buying coffee on the way to the office and ordering takeout, is a good starting place. Switching to basic cable and checking your insurance and cellular bills to lower them will also help free up money that you can use to pay down debt.
Increasing Your Income
Sometimes, despite your best efforts, you can’t free up enough money from your budget to successfully pay down your debt. If this is the case, you need to increase your monthly income. Thankfully, there are many businesses on the hunt for part-time employees. If you cannot work outside the home, there are many jobs online. Freelance writers, tutors, and data entry are a few work-from-home positions that are available.
Changing your lifestyle regarding spending habits will allow you to keep debt at bay and enjoy more of your hard-earned money. Adopting frugality when possible by searching for the lowest prices on everything you need and want is beneficial to your wallet. Use coupons, discount codes, and shop during opportune times. Eliminating wasteful spending will also reduce your reliance on credit and create a comfortable and financially sound lifestyle.
Goals for the Future
Creating a household budget is important. It’s something that accounts for all your debt, monthly and semi-annually. It also helps you see areas of weakness, allowing you to focus on them and achieve short-term and long-term financial goals.
The year 2020 is ending. Let 2021 be the year you achieve financial success. Through hard work, restraint, and perseverance, you can eliminate large amounts of debt and prevent it from dictating your life in the future.