Pay off your debt – 5 strategies to do it faster and easier

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Use these five helpful strategies to pay off your debt faster, easier, and without additional financial stress. (iStock)

The coronavirus pandemic has had a huge impact on the finances of the average American, both positively and negatively. Although many men and women have been able to reduce their credit card debt in 2020, many more are still struggling under the weight of substantial debt from student loans, credit cards and mortgages. For example, the average senior household carries between $ 31,000 and $ 86,000 in aggregate debt due to these three financial burdens.

Fortunately, having the right type of savings account, such as a high yield savings account with a high interest rate, can be essential to paying off your debt as quickly as possible. If you want to explore quick and easy ways to pay off your debt sooner, visit Credible to find a high yield savings option that matches your financial goals.

3 WAYS TO REPAY DEBT ON RETIREMENT

There are many tactics you can use to tackle your debt, including these strategies that could potentially help you achieve this faster and easier:

  1. Have a plan
  2. Address credit cards
  3. Debt consolidation
  4. Stop frivolous spending
  5. Find another source of income

1. Have a plan

Having a well-thought-out action plan to tackle your debt is essential to achieving this goal in a responsible manner. One way to easily manage all of your debts is to create a debt spreadsheet, showing each debt, minimum payment, interest rates, and due dates.

Another strategy you might consider implementing is the 50/30/20 budget rule: Spread your after-tax income over 50% of living expenses, 30% of discretionary spending, and 20% of savings.

2. Address credit cards

If high credit card balances are your main source of debt, you should try to limit or stop using your credit cards altogether. Interest rates can dramatically inflate your balance, especially if you open a new credit card account with a temporary 0% APY and don’t pay off your balance until the new interest rate is assessed. With the Average APR by credit card around 16%, even a month’s interest charge can be significant. Once you limit your reliance on your credit card, you can put potential interest rate charges into your savings and improve your credit score at the same time.

Did you know you can know your credit score without lowering it? Visit Credible today to check your credit score without negatively affecting it.

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3. Debt consolidation

Debt consolidation involves combining your credit card or loan debt into one balance. Using a credit card balance transfer or the debt consolidation loan has many advantages, including simplifying your monthly payments into one and potentially offering you a lower interest rate. Debt consolidation is different from a debt settlement, which is an attempt to negotiate a reduction in your existing debt with your creditors. This is a riskier option that will not guarantee that your debt will be reduced and you could actually pay more than your original balance if your debt cannot be paid off.

Are you planning to consolidate your debt? Then you should visit an online marketplace like Credible to explore a variety of personal loan options.

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4. Stop frivolous spending

Never underestimate the potential for savings by simply reducing costs. From making coffee and meals at home to limiting impulse purchases and canceling underutilized subscriptions, any small amount you can save could be used to pay off your debt.

If spending five dollars here and there can really increase your expenses, imagine how much you can increase your savings with that money instead. Visit Credible to Explore High Yield Savings Options this could maximize your interest income.

5. Find another source of income

The old “time is money” metaphor can help you pay off your debt. If you have the time available, a “side job”, such as part-time or self-employment, could help you increase your income. Just making $ 50 by working one more day a week equals $ 2,600 more in a single year.

DO I HAVE TO USE A PERSONAL LOAN TO CONSOLIDATE DEBT?

Final thoughts

Debt can seem overwhelming, but it can be managed responsibly by taking action. Creating and following a debt collection plan, which can include strategies like reducing frivolous spending or consolidating debt, can help you pay off your balance quickly. Opening a high yield savings account is one way to maximize your interest income potential, which can then be used to pay off your debt faster. Keep in mind that the FDIC has reported that the average national savings account only earns 0.04% APY, while the average high yield account earns much more.

Should You Use a High Yield Savings Account as a Debt Collection Strategy? Check out the current APY and learn more about the benefits of high yield savings account options through Credible.

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Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.

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