Reducing Your Debt
Debt can be one of the most crippling factors in your financial life. If debt gets out of control, especially high interest debt like credit card debt, it can cause stress, lower your credit score, and ruin your Financial life.
So here are 7 steps you can take to reduce debt and rebuild good credit.
1. Start by Listing Your Debts
Begin the process by making a list of all your debt amounts as well as details like interest rate, monthly payment amount and due date. This allows you to get a clear picture on your finances and to create an effective repayment strategy.
2. Check Your Credit Report
You should verify your debt amounts by checking credit reports and make sure that there are no errors on report. Everyone is entitled to a free report each year from every major credit bureau (Equifax, Experian and TransUnion), and we should all take advantage of that to monitor our credit.
3. Determine where you went wrong
Be honest with yourself and identify areas where you have overspent. Try to make changes to your budget so that you are never spending more than you’re bringing in.
4. Address High Interest Rates
Once you have made a list of all your debts, arrange them in order from highest to lowest and plan to repay high interest debt first. Connect to the lender and ask if they can help you out by reducing your interest rate. Many will agree to do so.
5. Other Strategies For Reducing Interest Rate
You can also reduce your interest rates by looking for introductory credit card offers that allow you to transfer balances at 0% or a very low interest rate.
Refinancing home and car loans also results in a lower interest rate, a home equity loan is another option to lower interest rate and ultimately lower debt amount.
6. Make payment on time
Skipping a loan payment affects your credit. So never miss a loan payment, set up a reminder or sign up for autopay online with as many bills as possible. Ensure that there is enough balance in your bank account to cover each payment.
7. Create Financial Goals
Lastly, create a vision for where you want to be in the future financially. Having a lot of debt can lead to excess stress in your life while reducing your financial options.
Following These 7 Steps can take control of your debt and pace a way to a more promising financial future.