Although millions of people tell themselves they will never be the ones who will fall into debt, before they know it the debt has piled up beyond their ability to easily pay it off. Overcoming your debt load and improving your credit rating is not as hard as you might initially think. What is needed it a bit of perspective, after all it took you some time to acquire the debt and it will take you some time to pay it all off.
Here are five proven methods that can pull you out of the debt spiral and help build your credit. The key to utilizing these five methods is to be persistent and if you are, week by week you will see your debt shrink.
Set a Budget in Advance
Perhaps the easiest part to accomplish of the five tips is writing out a budget for your finances, but it’s one of the hardest things to actually follow. The mistake most people make is that they don’t reinforce the discipline of sticking to their budget. Set your budget, write it out, find where you can cut expenses and have a daily checklist so you can keep on target to paying off your debt.
Pay More than the Minimum
Paying the minimum on your credit cards simply prolongs the process as the interest rates will gobble up much of what the minimum payment will be. Instead, you can start reducing your debt by making payments that are 10% more than the minimum. For example if your minimum monthly payment on your credit cards is $200, then start by paying $220 per month and chip away at your debt.
Get a Second Stream of Income
Whether you choose a part time job or perhaps launching your own part time business, obtaining more income will help you pay off your debt even quicker. Although the stress of taking another part time job or launching your own online business can cut down on the time you spend with your family, you should look at it as a temporary situation until you can pay off your debts. Set a schedule and once you have your debt paid off you can leave your part time job or stop your online business if it is taking up too much time for the profit you are making.
Remove Old Information From Your Report
As you pay off your debt, you’ll want to be sure to have that removed from your credit report as soon as possible. Look over your credit report on a regular basis and remove any negative information that is now outdated as soon as you can.
If your debt is growing too much for you to handle, especially if the interest rates are very high causing your debt to balloon significantly, then you’ll probably need to find a debt consolidation firm who can compile all of your debt into one lump sum that will reduce the interest rates and help you pay it off. You should seek out a non-profit debt consolidation firm that has clear guidelines on how they expect to be paid so you can factor that in to your budget.