Saratoga Tax Attorneys – Being in debt isn’t necessarily a terrible thing. Most people are, between mortgages and car loans and credit cards and student loans.
Being debt-free should always be a goal, but you should focus on the management of it, not the presence of it. It’ll likely be there for most of your life, and if you handle it wisely, it won’t feel so much like an albatross around your neck.
There are alternatives to shelling out your hard-earned money for exorbitant interest rates, and to always feeling like you’re running behind and on the verge of bankruptcy. You can pay off debt the smart way, while at the same time saving money to pay off even more, faster.
Know Where You Are
Assess the depth of your debt. Write it down, using pencil and paper or computer software like an Excel spreadsheet or Quicken. Include every financial situation where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, any outstanding tax liens, students loans, and payments on electronics or other household items through a store.
Record the day the debt began and will end (where possible), the interest rate you’re paying, and what your payments typically are. Add it all up, painful as that might be. Try not to be discouraged; you’re going to break this down into manageable chunks, and find extra money to help pay it down.
Identify High-Cost Debt
Yes, some debts are more expensive than others. Unless you’re getting payday loans (which you shouldn’t be), the worst offenders are probably your credit cards. Here’s how to deal with them.
• Don’t use them. Don’t cut them up, but put them in a drawer and only access them in an absolutely dire emergency.
• Identify the card with the highest interest and pile on as much extra money as you can every month. Pay minimums on the others. When that one’s paid off, work on the card with the next highest rate.
• Don’t close them, and don’t open any new ones. If you do, this probably won’t help your credit rating.
• Pay on time, absolutely every time. One late payment these days can lower your FICO score.
• Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club that you’ve never used? Looks for line items you don’t need.
• Call your credit card companies and ask them nicely if they would lower your interest rates. It works sometimes.
Save, save, save
Do whatever you’re able to do to retire debt. If you take a second job, earmark that money strictly for higher payments on your financial obligations. Substitute free family activities for high-cost ones; your local library may have cheap or free tickets to events. Sell high-value items that you can live without.
Be sure to click the following link for more ways to learn about how to Reduce Your Debt Load.