One of the many goals of people today is to be free of debt, a herculean task but not an impossible one. There are many everyday ways to cut down or even eliminate debts.
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| Image source: upstatebusinessjournal.com |
“Pay more than the minimum” is perhaps one of the best words of advice for people with accumulative debts like credit cards. Paying only the minimum monthly balance allows interest to gradually accrue on your debts, which can lead to hefty interest payments that approach or far exceed the original principal. Paying more than the amount covers both the principal and part of the interest, gradually paying off both.
When faced with multiple debts, a variation of this strategy can be used, diverting the greatest amount of funds to pay off the smallest debts and working upwards from there. The larger debts are paid at a minimum until the smallest debt is paid off, upon which the debtor diverts more funds to the next smallest debt in line.
In many cases, where paying for all the outstanding debts would take too long (and thus cost too much), a debtor may instead opt to consolidate the debts into a single fund. On their own, debtors with a sufficiently sterling credit rating can accomplish this by taking out a personal loan, which would be used to pay off the creditors all at once.
Finally, debtors can resolve their debts much faster by budgeting. Increasing cash flow and cutting back on expenses (sometimes to just the essentials) can help muster the cash for quicker debt payments. In addition, more conscientious spending can prevent debt.
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| Image source: dollarsfromsense.com |
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