If you’re sitting on a lot of debt right now, first know that you aren’t alone. The pandemic wreaked havoc on most people’s finances. Now that we’re seeing life get back to somewhat normal, you may wonder what you should do with your debt or if it will just hound you the rest of your life.
The good news is there are ways to conquer it. Here’s what you can do.
Consolidate your Debt
If you have any 0% APR balance transfer credit cards or cards with a low interest rate, consider consolidating as much debt as possible on the card. This will keep your interest charges lower, allowing you to pay the principal down faster.
Ask for a Lower Interest Rate
If you don’t have a credit card with a low interest rate, try negotiating with your creditor. If you have a good payment history, they may give you a lower rate just for asking. Make sure you state the reasons they should give it to you, such as responsible use of your credit line, paying your bills on time, and not carrying a balance.
Apply Windfalls to your Debt
If you come into money, put it toward your debt rather than spending it. For example, your boss gives you a bonus. While you’d love that 46” TV in your family room, your money would be put to much better use if you pay your debt down. You’ll decrease your interest charges and pay the balance down faster.
Increase how much you Pay
Don’t make just the minimum payments to your debts. Budget for a larger payment. Figure out how much extra money you have each month that you can put toward the debt and be consistent about it. No amount is too small so even if it’s only a few dollars, every bit counts.
Start a Side Gig
There are plenty of ways to make extra money today. Whether you sell items you no longer need or you take on a side gig, like freelance writing or website design, use the money for your debt payoff. Set up a separate bank account to receive the funds and use them only to pay your debt down.
Ask about a Consumer Proposal
If you’ve exhausted your options, a consumer proposal may be your best bet. The professionals at Creditaid can help you set it up so that you’re only paying a fraction of what you owe as a settlement. While it might hurt your credit, it can help you get out of debt, satisfying it for an amount your creditors are willing to accept.
Final Thoughts
If you’re in over your head in debt, it’s time to come up with a debt payoff plan. With consistency and patience, you can get yourself out of debt and back into a good place financially.
The key is to budget, plan carefully, and be ready to roll with the punches when life throws you curveballs. If it feels too overwhelming, the counselors at Creditaid are here to help keep you on track. Contact us for a free consultation.