Paying Off Your Debt

31 03 2011

Whether you accumulated consumer debt, or business debt, paying off your loans or credits is important for your financial health.  Although, you may fall into hard times and money is short, you still need to prioritize your bills.  Below are a few steps in getting organized and prepared to pay off debts.

  1. Create a list of what you owe.  Put a list of all your debts and bills in order of the balance owed.  Then prioritize your repayments by importance and the interest rate accumulating on the debt.  You should pay down the highest interest rate first.
  2. Eliminate Credit Cards.  Pay off your credit cards and then either cancel the account or use it responsibly.  Do not charge more than you can afford.
  3. Make a spending plan.  Track the amount of money that is coming in and how much you are spending.  Make sacrifices by giving up a luxury or two in order to pay off more of your debt.
  4. Pay more than the minimum.  By paying more than the minimum required each month, you will pay off your debts quicker and in return you will save money on interest that is accumulating on outstanding debt.
  5. Before declaring bankruptcy , borrow against your 401K, home equity, or life insurance, but be careful because that must be repaid too.
  6. Renegotiate terms with your creditors.  Let them know that if you are unable to work out a lower payment plan, or receive a lower interest rate, you will have to file for bankruptcy.  Most creditors will not want to experience a total loss on the debts owed to them.
  7. If overspending is a continuous problem get help.  It can be a difficult habit to kick, but it is important to have control of your spending to stay out of financial trouble.

Remember, it is important to be responsible and pay off your debt in order to save your credit score.  A low credit score can result in a world of trouble if you ever need a car or business loan, or want to take out a mortgage to purchase a house.

Advertisements

Actions

Information

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




%d bloggers like this: