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Deja Vu – credit card debt is under $20,000!

Back in July, I was pretty excited that our credit card debt was under the $20,000 mark. It was a little bit short-lived, because after receiving a total for our IRS debt, I had to increase our debt by over $1,600. It was a bit of a setback, but it fueled the fire to get our debt load back under the $20,000 mark.

Last night, after calculating our net worth, I knew I had to see if we could send more money towards our debt. Our checking account will be pretty low for a while, but I managed to squeeze out some money and our credit card debt is now at $19,990.

Yay!

The next mark will be $18,807. Why? Once we hit that, we will have paid off half of our credit card debt 😉…

Paying off your debts

Most people with high levels of debt are desperate to try and get it paid off as quickly as possible in order to enjoy more financial freedom and relieve themselves from the depressing burden of being in debt. However, wanting to pay your debts off and actually getting around to paying your debts off are two different matters altogether, and many people simply can’t see the light at the end of the tunnel because they are so deeply in debt.

The good news is that there are certain steps that you can take to try and repay your debts more quickly, but you will need to put in commitment and effort, and you will need to exercise willpower. Speeding up repayment of your debts can mean that you do not have to spend so long worrying about your level of debt, and you start looking forward to a time when you won’t have these debts hanging around your neck. There are also solutions available for those that feel they are unable to keep up with their debt repayments and need to look for a suitable solution.

Avoid minimum payments

If you are paying off credit cards, store cards, and catalogues, you will find that they request minimum payments each month. Although the minimum payments requested is the very lowest amount that you should pay, ideally you should aim to pay more – in fact, as much as possible. This will minimize on the interest that you have to pay on your debts, and will enable you to repay your debts far more quickly. The difference to the amount of time that you will be repaying your debts can be cut dramatically if you make more than the minimum repayment each month, and of course the more you can pay the quicker your debts will be cleared. Research has shown that some consumers that make minimum repayments on credit cards each month end up repaying a relatively modest balance of a couple of thousand pounds for longer than they are paying their mortgage.

Cutting back

Although it may seem obvious, one thing that many people fail to do is try and make cutbacks in their monthly spending in order to try and save a little money each month, which can then be ploughed into paying off debts. You can make various cutbacks such as cancelling subscriptions that are not necessary, cutting back on social outings or purchasing luxuries, etc. Although each amount may only be small, all of these savings will add up, giving you extra money to put towards debt repayments.

Do the switch

These days most consumers have become savvy enough to realize when they are getting a raw deal on their services, and many have saved a small fortune each month by switching energy supplier, broadband provider, insurance providers, etc. By doing a little research using one of the many price comparison sites available today you could save a fair amount on your outgoings each month, and again this can all be used towards repaying your debts and clearing the balance more quickly.

Second job

Many people decide to take a second job in order to raise extra money to clear their debts, and this can be an effective way to increase the amount that you can pay. You need to make sure, however, that you learn to allocate the extra money towards debt repayments and don’t get used to having it as disposable income, as otherwise you will be far less likely to spend it on paying off debts.

Increasing the amount of money that you pay off on your debts can have a snowballing effect, and this means that as you pay off one debt you will have more money to put towards other debts, which in turn you can also clear more quickly. The idea is that each time you clear one debt, such as a credit card or a store card, you allocate the money that you were paying on that debt to another debt, and once that one is repaid you then reallocate the money to the next debt on your list.

Of course, this is a plan that is only viable if you can meet the monthly repayments on your debts. There are people that, for one reason or another cannot keep up with repayments on their debts, and there are various solutions available. It is important not to default on your debts if possible, particularly in the case of secured debts that are secured against your home. You should seek professional advice from a debt management agency or debt charity in cases such as this, and they can provide you with information on the options open to you based on your circumstances.…