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Why Now is the Right Time to Pay Down Debt

pay down debt

pay down debtWe?re already well into 2018, and some of our New Year?s resolutions may have been put on the back burner. If paying down your debt was one of your must-do proposals ? revisit that ASAP. Why the urgency you may be asking? The start of February was marked by a dramatic price correction in equities markets around the world. Nothing surprising there. What is surprising is the reasoning behind the sudden selloff on the Dow Jones, NASDAQ, and S&P 500.

Rising inflation, brought about by a sudden uptick in wages, and improved economic performance. The stock market is a funny old thing, and even if Main Street has little knowledge of the complex mechanics thereof, there is a lesson to be learned here. That lesson is as follows: when speculators pull their money from equities and put it into bonds, gold and other safe-haven assets, something big may be on the horizon.

Watch the Feds

At this point in time we?re staring down the barrel of yet another interest rate hike. According to the CME Group FedWatch tool, there is a 77.5% probability of a rate hike on Wednesday, 21 March 2018. All this financial jargon may go over the top of our heads, but it shouldn?t. If another interest rate hike is approved by the Fed FOMC, the federal funds rate will rise by 25-basis points in the region of 1.50% ? 1.75%.

Note that the Fed has been tightening monetary policy since December 2015. The rate hike is great if you have money socked away in an interest-bearing account, but not so good if you have high levels of outstanding debt. The folks may be wondering how it is possible to pay down credit card debt before the next rate hike, or a successive series of rate hikes in 2018. Fortunately, here are 4 quick ways to get on top of things before the debt becomes too excessive:

Target Your Most Expensive Credit Card Debt First

If we?ve learned anything about debt, it is this. It grows and grows. By focusing your efforts on the highest interest-related debt, you will be paying down your biggest debt burden first. Low-interest debt is less of a concern.

Think Outside the Box When Paying down Debt

If you are ready to pay down debt, why settle for high interest repayments on your debt obligations? Consolidate your debts such as credit cards, personal loans, short-term loans or other loans into a figure that you can understand. Too many debts all over the place are difficult to manage. If you consolidate debt, you know exactly how much you owe at any time. Now, apply for a debt consolidation loan at a lower interest rate than the interest being charged on your credit cards or other lines of credit. This is intelligent debt management strategy.

Be Bold ? Put Your Credit Cards on Ice

Take it whichever way you want ? literally or metaphorically. But put your credit cards on ice for sure so you can stop using them.

Prioritize Your Expenses and Trim the Fat

Yes this is a reference to setting a budget, sticking to it, and being financially responsible. If your credit card bills are difficult to pay down, check to see if you have unnecessary debit orders going through. These include things like magazine subscriptions, Netflix subscriptions, home land lines, gym memberships that you don?t use, and annual payments to the quack fortune teller on the street corner. In fact, any and all unnecessary leakages from your bank account should be considered.

These are but a handful of the many effective techniques that you can employ to reduce your debt burden. Be bold, be brave, and take concrete steps to pay down your debts so that you can live a stress-free life.

Start the Year Right with These 5 Tips to Pay Down Debt

Start the Year Right with These 5 Tips to Pay Down Debt

Start the Year Right with These 5 Tips to Pay Down DebtThere is nothing magical about starting a new year. The marking of the passage of time is simply a human creation, with the calendar nothing more than a way to stay organized with our fellow humans.

If you are planning to do something new, you don?t have to wait until the calendar technically ticks over to a new year in order to make it happen ? you can start anytime.

With that said, many people still hold to the tradition of making resolutions each January. If you are in that camp, some of those resolutions may relate to your finances.

Indeed, countless people resolve themselves to make significant financial changes when the new year rolls around. Should you find yourself in need of paying down debt in the coming year, consider using the following tips.

1. Clean House and Save

As long as we are making resolutions, why not combine a couple of them? To pay down your debts slightly, consider selling off old items that you no longer want or need.

This idea will serve the dual purpose of cleaning out your house and also working on your debts. You might not make a lot of money this way, but apply whatever money you do make directly to the debts you would like to eliminate.

2. Pick Up Part-Time Work

This is a popular plan when debt is getting in the way of a financially comfortable lifestyle. After the holidays, you may feel that you finally have a little more time on your hands. If that is the case, look around for a part-time job that can help you make some extra money.

Even if you only work a few extra hours per week, that money will add up in a hurry month after month while working on your debts.

3. Eliminate a Bill

When the calendar turns over to January, take a good look at your monthly expenses and pick out one bill that you are going to get rid of in the new year. This may be a gym membership you never use, or a subscription to a service that is not necessary.

When you eliminate this bill, take that money and add it immediately to your debt payments. Just like that, you will have taken money that was previously being wasted and applied it to an important goal.

4. Skip One Meal Out

Of course, a common resolution for the new year is to lose weight. If you are both trying to lose weight and pay down debt, it might be wise to skip one meal out per month. Even just one meal per month could save you $50 or more, which is a nice sum to be able to add to your debt payments.

5. Review Your Overall Budget

It is easy to just go from month to month with the same budget, but it is worthwhile to review that budget once per year. The start of the year is as good of a time as any to do just that. Take a look at your budget as a whole to see if you can find any line items which can be reduced in favor of making extra debt payments.


Did you make any resolutions this year? How are you going to stick to them?


Photo courtesy of: Tessa Rampersad

5 Easy Debt Elimination Tactics for Millennials

5 Easy Debt Elimination Tactics for Millennials

5 Easy Debt Elimination Tactics for MillennialsThe generation often referred to as ?millennials? is facing many of the same problems seen by previous generations.

It is easy to fall into debt as a young adult, as your expenses will often outweigh the salary you are earning in your young career. If you aren?t careful, those debts can quickly mount, and you may find yourself in a bad financial position, even as your adult life is just getting started.

So what can you do about this? There are a couple of options. You can find a way to make more money, or you can find a way to cut your expenses. The five tactics below will include tips on both sides of this equation.

Pick Up a Side Hustle

This is an emerging option which is becoming more and more popular with the millennial set.

Since you are just getting started in your full-time career, you probably don?t have many options for increasing your income in that setting. As a newcomer, it would be pretty tough to walk in and ask for a raise. What you can do, however, is make some money while you are away from the office.

There are many different side hustle options available these days, from doing freelance work online to driving for a service like Uber or Lyft. Even if you only have enough time to make a little money from these ventures, that money could make all the difference in terms of paying down your debts.

Learn to Cook

Sadly, many young adults these days don?t know how to cook their own food. This is a problem for a number of reasons. For one thing, eating out all the time is rather unhealthy. Also, it is expensive.

You may be surprised to find just how much money you can waste by dining out for the majority of your meals. Learn how to cook and you will be doing something positive for your waistline as well as your pocketbook.

Find a Roommate

If you are not married, you would do well to find a roommate in order to split your living expenses. Living with someone else who is paying half of the rent is one of the best things you can do for your budget.

In addition to splitting the rent, you can divide up a number of other costs as well, such as the cable bill, internet expense, and more.

Set a Short-Term Goal

Since you are young, it is likely that your debts are not yet too far out of control.

Maybe you owe something like a few thousand dollars on a credit card account. That might seem like a big hill, but you can actually get over that hump with some hard work and sacrifice.

Cut out some of your other spending in the short-term in order to pay down the debt as fast as you can.

Craft a Careful Budget

While you are working on getting rid of your current debt, another beneficial thing you can do is create a budget for your life moving forward. This will help you to stay out of debt once you have caught up.

Staying out of debt is painfully simple ? you just need to earn more than you spend. Make sure that is the case through the use of a budget and you will be off and running.


What have you done to eliminate debt? Do you have any other suggestions for millennials?


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4 Ways to Avoid Debt Burnout

4 Ways to Avoid Debt Burnout

4 Ways to Avoid Debt BurnoutAs you already know, paying off your debts should be your top financial priority. Hopefully you have already focused yourself on this point, and you are working hard to wipe out those debts as quickly as you can.

There is a great reward at the end of this process, when you are debt-free and you can look back on your financial troubles as nothing but a memory.

Unfortunately, even people with great intentions can lose their way from time to time. Commonly this is referred to as debt burnout. Basically, the idea is that you get tired of dedicating your money to debt payments, and you wind up spending some of your income on other things instead.

If you find yourself suffering from some degree of debt burnout, review these tips for help.

Picture the Future

One of the strongest ways to stay focused on your debt payoff goals is to picture the future you will have once the debt is gone. Imagine what you will be able to do with your money, and all the fun experiences you will get to have.

There will no longer be any guilt in the back of your mind about spending the money, because you will know that you can truly afford it. It isn?t always easy to reach that future, but it sure will feel great when it arrives.

Allow Yourself a Minor Break

This idea is similar to what you might do if you are trying to lose weight. When on a diet, you are sure to get tired of eating the same old healthy foods ? so you might ?cheat? and have a more enjoyable meal from time to time instead.

There is nothing wrong with this plan. In fact, it is actually recommended by many diet coaches.

You can do the same thing with your debt payment plan. Need a break to avoid debt burnout? That?s okay ? just make sure it is a short one, and a cheap one. Don?t spend a lot of money on something you don?t need. Instead, purchase something relatively inexpensive that you actually do need.

Talk It Out

Debt can be an incredibly personal problem. It is much easier to deal with, however, if you have a friend or family member on your side. Try to find someone you can talk to about your debt, and use them to stay accountable. You won?t want to admit that you have gotten off track, and that feeling of responsibility may be enough to keep your habits in check.

Focus on Other Things

You shouldn?t be making your debt payments the focus of your entire life. There is much more to life than paying bills, so don?t sit around thinking about this all day.

Instead, get out and live your life, and just let your debt work down over time thanks to the payments you are making. It would be a shame to get to the end of this process only to look back and think about what you should have been doing at the time.


Have you ever faced debt burnout? What did you do?


Photo courtesy of: AgencjaAIAC

Will Debt Consolidation Help You Become Debt Free?

Will Debt Consolidation Help You Become Debt Free?

Will Debt Consolidation Help You Become Debt Free?To consolidate or not to consolidate your debt? That is the question. Actually, the real question is will debt consolidation help you become debt free?

It can be tempting to consider debt consolidation, especially when one accumulates a large amount of debt from several different sources. They might start thinking about consolidating their debt from several credit cards down to only one with a balance transfer, or they might think about taking out a personal loan to consolidate credit cards and other forms of debt.

Debt consolidation can be successful, but it takes a lot of discipline to pay off that debt, not use your cards and refrain from getting new ones. So, should you do it or not? Let?s take a look at some of the arguments for both and against debt consolidation.

Why You Should Consolidate Debt

As mentioned, debt consolidation only works if you are dedicated to an overall debt reduction strategy. If you are willing to make the necessary sacrifices and be disciplined, debt consolidation is a great method to add to your debt-free strategy. Then again, if you are nearly debt free already, it may not be worth the hassle to consolidate your debt.

Here are some of the pros of consolidating your debt.

Lower Interest Rates

When putting all of your debt into one loan or credit card versus several you usually get a lower interest rate. A lower interest rate can help you to pay off your debt?quicker as more of your money will go toward the principle instead of interest. Lenders like Avant, Lending Club and LightStream can all lower your rate by half, or more, and help you kill the debt quicker.

Lower Monthly Payments

Debt consolidation?can also result in a lower overall monthly payment too versus making minimum payments on several debt balances. Lumping all of your debt together and making only one monthly payment can also help you with paperwork and budgeting as you are less likely to let something slip through the cracks since you only have one loan and payment to keep track of and remember.

How Should You Consolidate?

There are several different ways you can consolidate your debt. You could choose to do a balance transfer to a credit card with a 0% or low APR. Or you could try to take out a home equity loan, personal loan, or some other type of loan. Remember, when you consolidate your debt, you still have to pay it all back. So, don’t go and start swiping?your credit cards again after you’ve consolidated.

Why You Shouldn’t Consolidate Debt

If you aren’t really dedicated to getting out of debt once and for all, it may not be a good idea to consolidate your debt. Here’s why.

Could End Up in?More Debt

Some people who consolidate their loans actually?end up with more debt. Their mindset can drive them further into debt as they continue to spend what they don?t have. They may feel like their debt is “not so bad” once it’s all consolidated onto one credit card.

Could Lose Your?Assets

If you use a home equity loan to consolidate your?debt and then default on that loan, you can lose your house. Being homeless with a mountain of debt does not help anyone with their debt reduction plan.

Another mistake you could make is taking out a 401(k) loan to pay off debt. This is never a good idea. You’ll have to pay hefty fees and taxes to take out a loan, and your money won’t be earning interest while you’re using it consolidate debt.

You have to be willing to chop up those cards, change your spending habits and be dedicated to paying off debt no matter if you consolidate debt or not. Without this drive, becoming debt free will only be a fantasy, even if you do consolidate your debt. If you are considering debt consolidation, make sure you’ve considered the pros and cons carefully.


Have you ever considered debt consolidation? If you’ve tried it, did it work for you?


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