4 Things to Know About Paying Off Debt

It seems that every American has debt of some kind. And not just debt like your house, car, or student loan, but credit card debt – the kind that piles up and is sometimes caused by things of luxury more than need. If paying off debt is your goal, the information below may be able to help you.

Where will I get the money?

To pay off any debt, you’ll need extra money to put towards it. If you’re only paying the minimum payments, you won’t get far. So, it’s essential to use any extra monthly income towards this goal. You can also get a second job, consolidate the debt down to one payment versus multiple, or work with each company you owe to reduce the total amount owed.

Which debt should I pay off first?

There are two schools of thought on this. You can tackle your highest-interest debt, paying that off first so that you pay less overall. Another option is to pay off the smallest debt, which frees up cash that you can then put towards the next biggest debt, giving you a quicker sense of achievement.

What if I lose my job while trying to pay off my debt?

Losing your job or having some other kind of crisis that makes it hard to cover bills is something that could happen to anyone. The first thing you’ll do is stop paying extra to your debt because you won’t have the money. But what about the minimum required payments? This is where something like debt protection can be beneficial. It’s a safeguard against a situation that prevents you from paying your debts, and if you need it, it can pause, make payments for you, or even cancel the debt altogether.

Is there anything I can do to make this go faster?

Yes! The first absolute must is to stop using credit. Only spend what you can afford with your current money. And try to cut back that spending by looking at your budget for wasted money. Also, make sure to use any windfalls of cash, like your tax refund, and put it straight towards your debt. Try selling off things you no longer use for some quick cash and brainstorm with your family about other things that you may be able to do that are unique to your situation.

No matter your situation, you’re not alone. According to CNBC55% of Americans that have a credit card, have debt on those cards. Just remember your end goal and that one day, you’ll be done paying off debt and able to enjoy a little less financial stress.