Debt Management: How to Pay Down Your Debt and Save Money at the Same Time
No one should fight debt alone. Lucky for you, @Ease Credit Management Solutions is here to help!
We’ve all been there; the constant balance of trying to pay off your debt, while still trying to save for a rainy day. What’s more important? Managing your current debt, or saving money for the future? Fortunately, there are ways that you can manage your money that will you don’t have to choose just one. We’ve listed below five simple ways to manage your debt load, and still have some money in the bank.
- Take Care of the Largest Debt First.
Any credit cards you have maxed out, or Student Loan Debt that just won’t stop occurring interest, tackle these large bills first. Work on paying the debt that has the highest interest rate and commit to paying at least 5% of your largest bill each month. For example, if your largest debt is a credit card that is maxed to the $10,000.00 limit, using the 5% rule you would have to commit to paying $500.00 a month to pay it off. You could budget $250.00 each pay day or one payment of $500.00. Baby steps make the big picture easier!
- Consider a Personal Line of Credit.
It might be worth looking into a personal Line of Credit at your bank to consolidate some of your debt at a lower interest rate. The average interest rate of any credit card is 19.9%. That’s a lot of interest and very little money being applied to the principal of your debt. Some banks offer a personal Line of Credit with as little as 4% interest. This way you can pay off your debt with a much lower interest rate, while being able to pay it off faster and keep much more of your hard earned money in the bank. Now that’s smart debt management.
- Stop Using Any Remaining Credit Cards Immediately.
One of the most important steps to Debt Management is to make sure you’re not continuing to rack up new debt as you’re paying off current debt. Cut up your cards if it will help you from using them, or simply remove them from your wallet and put them in a safe place, so that they are out of sight, out of mind. You’re going to want to continue paying the minimum monthly payment on any remaining cards to bring your balance down to zero, so make sure to continue paying what you owe on them, even if you are not using them the way you used to.
- Prioritize Your Current Spending Habits.
Separating your needs from your wants is a crucial step in managing your debt. You may want a new pair of jeans heading into a new season, but do you actually need them? If you ask yourself this question each and every time you have the urge to spend your money, you’ll probably find more often than not, the answer is no. What about your current bills? Do you need cable? What about the gym membership you purchased but never use? These are just a few ways you can prioritize your spending and manage your debt more effectively today.
- Make Sure You Still Put Money Aside For a Rainy Day.
Once you have committed to paying off your largest debt, refraining from adding on any new debt, and prioritizing your current spending, you’ll be surprised to find you do have money to put into your savings account. While it might only be $50 or $100 a payday to start out, the lower your current debt gets, the more money you’ll have to set aside. Debt management is simple with a clear plan of action. If you follow through on some of these steps, you can be living debt free sooner than later, and on your way to a brighter future!