Three Strategies For How to Write off Debt
In debt and ready to do something about it, but unsure how to proceed? Then this article is exactly what you need. A problem many people in debt face is they are unsure about how to act when the desire arises to finally get down and dirty and do something about the problem. What happens in many cases is they get on the internet and start reading about what to do, but with all the information out there they get overwhelmed and unsure about what direction to go and who to trust. But it doesn’t have to be that complicated as you’ll see in a moment.
Get rid of credit cards
The first thing to do for anyone who wish to write off debts is to get a scissor and all your credit cards. Then cut up all your credit cards and throw them out. This is such an easy step that will save you a lot of trouble later, but many people neglect anyway. Maybe they think they will be able to handle it from now on with their new determination or maybe they don’t think having credit cards affect their spending habits, but that is exactly the kind of thinking that got you into trouble the first time. And if you want different results it’s a good idea not to keep doing the same thing. The problem with trying to go on will power alone is that your determination and inspiration will wear of, it always does. So the trick is to use the determination to make it easier to keep going than to fall back in the rut. And just take my word for it when I say having a credit card does affect your spending habits. It is a psychologically bigger burden to give someone cash instead of just swiping that card when you make a purchase. And you also won’t be able to buy big stuff without going out to get cash and that extra chance to think about if you really need to buy that extra TV is often enough to realize you don’t need it.
Pay off more than you have to
If you just pay the minimum payments it will take you forever to get out of debt. The reason being you are almost only paying the interest and the amount of money you owe only decreases slowly. In order to really write off debt and not just slowly hand over your money to the credit card company in form of interest you have to start using the extra money at your disposal to make bigger payments. In the short term this will take some sacrifices, but in the long run it will get you way faster out of debt and give you the freedom that comes from being debt free. A funny thing about being in debt is that you have a great investment opportunity. If you for instance pay off $100 extra on your 25% interest credit card debt you have just made one of the best investments you will ever be able to in your life. Say you decided to buy stocks for the extra money. You would be able to expect less than 10% interest over the long run.
Pay off debts in the right order
When you start to work on getting out of debt you might have several different loans to pay off. The most important thing is to get started, but the order you decide to pay off your loans does have a influence on how long it will take you to be completely debt free. Some people like to pay off the smaller onces first, because it makes them feel like they are really getting somewhere. And some people like to pay off a little here and a little there to work on all the loans at the same time. But there is a best way to go about it and it is simply to pay off the loan with the highest interest first. If you think about it, it becomes very clear. The higher the interest the more it cost you every month to have that loan. So get a piece of paper and write down all your debts and the interest you pay on each and then start paying off the most expensive one first and move to the second when the first is paid off etc. This will get you out off debt faster and save you money in the long run.
That was three practical ideas you can start implementing right away. Each one of the will help you get out of debt faster than if you didn’t apply it. So how about cutting up those credit cards right now? Finding out what order to pay off your debts? And start paying more than you have to each month?
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