Paying off Debt Archives

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How to Pay Off Debt When You Make Little Money

April 6, 2016 Wise Dollar Debt 2 comments

Getting out of debt when you are already struggling to pay your monthly expenses can seem like an impossible task. How do you save up to pay off past debts when your income barely allows you to maintain your current lifestyle to begin with? To be sure, this is a problem that is faced by many people. With little income to work from and a mountain of debt to pay down, it can seem like your options are few and far between.

Fortunately, there are ways in which you can get out of debt without asking for?a raise somewhere out there in the working world. Even using just your current salary, you may be able to find a way to carve out money each month to pay down that damaging debt so you can look forward to a better financial future.

Consider Consolidation

When trying to pay off debt, the interest rate can be a significant hurdle to overcome. This is a piece of the puzzle that is keeping you in debt, as just paying off the minimum balance each month will do very little to reduce your outstanding debt. It can be years and years before you even make a dent in that outstanding balance if you are only making the minimum payment. However, if you are dealing with a high interest rate, the minimum payment may be all you are able to handle.

That is where debt consolidation comes into the picture. When you consolidate your debt, you will bring all of your various accounts together into one place where you can pay it off all together ? hopefully at a lower rate than you were paying on the individual accounts.

For instance, if you are paying on credit card balances that have a 20% rate, you may be able to consolidate those accounts into a loan that charges between 5% – 15%. While you will still be paying interest, that interest will be less and you will be looking at a shorter length of time before your debt is killed. There are various options available to consolidate and reduce your interest rate with Avant and Lending Club being among the best.

Not Every Deal is a Good One

You have probably seen plenty of debt consolidation offers, but remember, not every debt consolidation deal is a good one. Don?t fall in love with this idea so much that you are willing to take the first offer which comes down the pipe. It is important that your debt consolidation deal actually saves you money, so carefully check the interest rate that you are being offered, along with any fees that you will have to pay to close the loan.

Zero Interest Balance Transfer

One other option for paying down debt while not making a large income is to look for balance transfer offers where you can move what is owed on your credit account to a new card which offers 0% interest for a period of time. This can be a great way to take a ?break? from interest charges while taking a nice bite out of the overall balance. One caveat with this plan, however, it to watch out for upfront fees ? the charge to transfer your balance may outweigh your interest savings in some cases.

Have you considered these options to help you get out of debt? What other strategies can you think of to help get out of debt without earning more?

Photo courtesy of: Flachovatereza

5 Ways to Kill Your Debt Next Year

December 9, 2015 Wise Dollar Debt No comments

There is nothing fun about being in debt. It is something that is constantly on your mind, and it is a problem that only seems to get worse and worse as time goes by. It is difficult to make enough money to meet your current expenses while also chipping away at your past debts.

However, if you want to pay off your debt?and move on to a debt free future, you will need to come up with a smart and effective game plan.

Following are five tips for crafting a plan to kill off debt in 2016.

Pay Over the Minimum

If you can?t afford to make huge payments on your debt each month, you should strive to at least pay a little bit over the minimum amount due. If you only pay the minimum, your debt isn?t going anywhere anytime soon ? so even paying $20 over the minimum each month is a helpful start.

As you are putting together your budget, don?t plan on making minimum payments. Instead, commit to going at least marginally over that minimum to make head way on your balances.

Make Money on the Side

If you work five days a week at your day?job, you may be able to pick up some additional work?on the weekends with the intention of sending that money straight toward your debt. This work could either take place in the physical world (such as working at a retail store on Saturday and Sunday), or you could find some online work that you are capable of doing on the side. There are many opportunities?so be sure to explore this possibility too.

Look at Consolidating Your Debt

Consolidating debt isn?t the right choice for everyone, but it can be a great solution for some people who need to lower their interest rates. If you are paying on a number of high interest credit accounts, you might want to look at consolidating those debts into a single, lower rate account.

However, when looking at this option, make sure you don?t have to pay too many fees in the process or you might negate any advantage that you gained through the lower rate. There are many options to consider, such as Avant, that allow you to save money on interest and become debt free quicker.

Build a Tighter Budget

In addition to finding ways to make extra money?you can also find ways to save some money at the same time. While parts of your budget aren?t going to change no matter what you do, it is probably possible to trim your expenses in certain areas such as entertainment or travel. It might not be fun to make these short term sacrifices, it will be well worth it when you see your debts disappear.

Refinance Your Home

This is another option that won?t be right for every individual, but it could be a great solution to your problems. If you own your home and have some equity in the property, you could look at refinancing as a way to raise money that can be used to pay off high interest debts. The interest rate you get on a new home loan will almost certainly be lower than your existing debts, so this is a plan that can work out under the right set of circumstances.

Are you in debt? What is your plan to pay off debt this next year? Are you going to try any of these strategies?

Photo courtesy of: Dan Moyle

Why You Shouldn’t Fall for “Christmas Skip-a-Pay” Ploys

October 26, 2015 Wise Dollar Debt 6 comments

As I walked down to my mailbox last week I was expecting to get the usual: junk mail and maybe a bill or two. The end of the month is approaching and that usually means getting all my statements and bills for the following month. (Yes, I’m old-school. I like getting paper statements in the mail.)

After sorting through and initially tossing out junk mail and adding a bill to my bill pile, I saw an envelope hand-addressed to me from my local credit union.

“That’s weird,” I thought as I proceeded to open the envelope. That’s when I discovered the latest money-making ploy the local credit union has come up with – “Christmas Skip-a-Pay”.

Here’s what the “friendly” letter said.

“Tis the Season for Christmas Skip-a-Pay! If you qualify, you can have extra money to spend on your Christmas shopping. Upon request, you may skip your November or December loan payment(s) for one month.”

Sounds great, right? Who wouldn’t want more money for Christmas shopping!

That’s when they hit you with the fine print:

“This agreement extends the repayment period of your loan(s). The finance charge will continue to accrue on your unpaid balance from the time of your last payment. Total interest paid on the loan may be greater than was originally disclosed to you.”

Later on they also state that there is a maintenance fee of $10 per loan for every loan you decide to skip a payment on.

The low price for getting some extra money?to spend on Christmas is $10 up-front, a longer loan term, and paying extra interest. What a service!

The sad part is, I actually thought about applying for half a second.

I thought I could apply the money from my “skip-a-pay” toward my high interest credit card debt instead. If I were to exercise the stone cold willpower it takes to do that with the “extra money” I had from skipping a payment, I could possibly end up saving money.

Luckily, common sense and the super-nerd in me who would’ve had to calculate to the penny how much I’d save (or not)?kicked in and I ripped the flier in half. (Then I taped it back together so I could write this post.)

I’m really glad I didn’t fall for this trick, although I’m sure many people will as it seems like similar programs are offered across the country. It’s bad enough if they fall for it with one loan one year, but I’m sure there are many who will apply for the program for multiple loans every year the program is offered.

Let’s think about the costs of skipping a payment.?If you have a five year loan and you participate in this program every year, you’ll have spent an extra $50 on the maintenance fees, plus the extra money on interest for the payments you skipped, and your loan term will be extended by at least an extra five months past the date on your original loan agreement.

You could have just taken on a short-term side hustle to make extra money, or planned ahead with your budget to help you pay for Christmas gifts instead. If you stick to your Christmas budget, neither of those options will end up costing you extra money or extending the amount of time you are in debt. That sounds like a way better deal to me.

Have you ever heard of a program like this? Did you ever fall for it? How are you going to pay for extra expenses this holiday season?

Photo courtesy of: jkrebs

Pay Off Debt Faster With These 5 Simple Tips

October 19, 2015 Wise Dollar Debt 4 comments

Paying off?debt is hard work. It can be a long process in which you have to practice self-control 24/7 so you don?t overspend your budget or give in to impulse purchases?you don?t really need. Trust me!

Luckily even after you?ve mastered the basics, like having a budget and tracking your spending, there are some things you can do to help you pay off debt faster. Here are five simple tips you can implement to help you pay off debt faster.

Choose a Repayment Plan to Pay off Debt

Instead of paying off debt all willy-nilly without a plan, you should choose a debt repayment plan so you know what you should be focusing on whenever you make payment toward your debts. There are several popular repayment plans to choose from, like the debt snowball, the debt avalanche and more.

The key here is to make sure you pick the plan that works best for your mindset and your situation. You can also consolidate your debt through Avant?or Payoff?to significantly reduce your interest rate and thus save you considerable money.

Make Extra Payments Often

When I first started side hustling to make extra money?for debt, I?d wait until the end of the month to apply any extra payments on my debt. Often by the time the end of the month came around, I?d already found other ways to spend that ?extra? money instead of putting it toward my debt. I?d end up spending it on extra meals out with friends, or on other fun, but unnecessary things.

When you are in debt, especially high interest consumer debt, you need to get out as soon as possible. One way to help you make extra payments toward your debt instead of wasting your extra money is to make the extra payments often.

Start making extra payments online whenever you have a surplus in your account and you?ll have paid off the next debt on your list in no time!

Stay Focused

Make a goal poster, a debt progress graph, or some other visual reminder to help you stay motivated and on-track with your debt repayment progress. Paying off debt is hard, so having a visual reminder of why you are making sacrifices is key to helping you stave off debt fatigue.

Earn More Income

I kind of touched on this one already, but one way to pay off your debts way ahead of schedule is to find ways to increase your income and put the extra toward debt. You might be able to increase your income by asking for a raise, getting a part-time job, or starting a small business in your spare time. Side hustles?have become very popular amongst those working hard to get out of debt.

Challenge Everything!

Thanks to my friend J$ from Budgets Are Sexy, we?ve come up with this last one, Challenge Everything! By challenging every expense in your budget you are likely to come up with some extra money that you can put toward your debt.

For example, if you cancel your TV subscription or negotiate a lower cell phone bill, you can put that extra money toward your debt every single month. There are many options to do both, often with little sacrifice on your part. You can switch to Republic Wireless, for example, and get a cell plan for as $5 per month.

Some of these tips might not sound like they?d make too much of a difference, but even paying an extra $5 perweek toward your debt because of some of these methods adds up to be $260 over the course of a year.

Have you used any of these tips to pay off debt faster? What other ways can you think of to help you get out of debt faster? How do you motivate yourself when trying to pay off debt?

Photo courtesy of: Markgraf-Ave

4 Ways to Get Back on Track Financially This Year

June 10, 2015 Wise Dollar Budgeting 8 comments

It is easy to get off track financially?and suddenly find yourself staring at a growing pile of bills each month. While it can be a bad feeling to get into this position, there is no sense sitting around and worrying about it ? the only thing you can do is get started on correcting the problem. By developing a plan of action to get yourself on the right financial path, you can set a course toward a more prosperous future.

Obviously it would be great if you were able to increase your income as a way to deal with your bills ? but that isn?t always possible. Until you are able to land that raise or promotion that you are looking for, consider the following four ways that you can get yourself back on the right financial path this year.

#1 ? Cut Out Two Bills

Look through your monthly bills and try to identify two that you could either reduce, or eliminate altogether. If you are like most people, this process shouldn?t be that hard as you are probably already paying for things that you don?t need or don?t use that often.

Examples of bills that could potentially be cut out include gym memberships and other ongoing subscriptions. Items that could maybe be reduced include your cable bill and your cell phone bill, if you are able to downgrade to a less-expensive plan.

#2 ? Save First, Spend Later

Most people go about the process of saving in reverse. They spend their money throughout the month how they wish, and then try to save whatever is left over.

Try turning that process around ? move a percentage of your money into savings right away, and then use what is left to pay your bills and pay for other costs like entertainment and shopping. This will take discipline, but you will start to appreciate the value of this approach when you see your savings account?start to add up.

#3 ? Attack the High Interest Rates

When paying down debt, be sure that you are going after the debts with the highest interest rates first and foremost. This is also known as the debt avalanche method. Usually this means attacking your credit cards first.?If you are able to pay more than the minimum each month on these balances, focus your extra payments toward getting rid of the balances on your accounts with the highest rates.

While it might be exciting to think about paying off your student loan or a car loan, for example, those rates are usually far lower than a credit account. Be smart about your payments so you can save in the long run.

#4 ? Reduce Your Grocery Bill

There is a good chance that you could save money each month at the grocery store just by planning ahead better and shopping smarter. Wasted food is money that goes wasted as well ? so try to plan your meals in a way that you don?t end up throwing away very much food because it has gone bad before getting used. Make use of leftovers and look for sales at the grocery store to save money week after week.

What other ways can you think of to help yourself get back on track? What is the first thing you’d do to get back on track financially?

Photo courtesy of: Mecki Mac

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