If you’re in debt, you know how frustrating it can be at times when you feel like you are constantly sending your paycheck to other people rather than saving it for yourself. That said, paying down your debt is a really noble goal and here are a few ideas for how you can make progress faster.
Remember, the faster that you get out of debt is the faster that you can start putting your money towards things that matter to you in life – saving for retirement, buying a house, and more. Being stuck in debt can make you feel trapped and can hold you back from life. So, take these tips in and take action on them – action equals results.
Refinance Your Mortgage and Other Debt
If your credit is good enough and some of your debt is from a few years back, you may have the option to refinance it at a lower rate. Right now, even though mortgage rates have gone up a little bit, they are still at historical lows. Every week when I watch the Suze Orman show, it shocks me how many people still have mortgages over 5%, when you can easily get a mortgage for around 4% or lower. Simply refinancing your loan can save you hundreds of dollars per month.
Plus, if you refinance but keep paying the same payment you had been responsible for on your original loan, you’ll pay your debt down faster. It’s a simple trick, but it can help you move in the right direction faster.
Finally, don’t forget about other debt, like credit cards. While you can’t refinance this debt, you can look at balance transfers that offer a lower interest rate (or even 0% interest rate). The same rules apply – pay the same payment and get out of it quicker.
Reward Yourself with Extra Payments
If you usually stop for a coffee every weekday at work but are able to cut that down to just three times per week, why not take the money you were spending those other two days and put it towards your debt? $6 per week is $25 per month which is an extra $300 against your debt each year!
Another trick is to round up the payment amount and use it to pay down your debt. For example, if your coffee normally costs $4.50, take that additional $0.50 and round up to $5.00 and use it for your debt. There are actually some debit cards that help with this using the slogan Round Up or similar.
Earn Extra Cash
Whether you take on a second job, work some overtime, sell some of your belongings or do little things like pet-sit from time to time, pretend that extra money exists for nothing other than paying down your debt. You can also earn some extra cash by simply doing your normal spending habits – such as using a cash back rewards credit card or by using online services like eBates. This service gives you anywhere from an extra 1% to 5% cash back for items you buy online. So, if you normally buy dog food for your pet each month, look at buying it online and saving some extra cash.
As you make some progress on your debt using some of the tips above, you’ll likely get really excited to see your balances falling faster and that will no doubt inspire you to pick up the pace in things you can do to keep sending more and more cash to your creditors which means that you’ll soon be able to send even more to your savings account!
What other tips do you have for paying down your debt faster?