Well its about time for another financial challenge series. Here we will start off with the first post about how you can take action now and reduce your debt. Of course, it is always best when taking on a new challenge that we break down the process into more manageable stages. With that being said, here is the first of 3 steps you can take now in order to lessen your overall debt load.
Step 1: Increase your Debt Payments by 10%.
Check Your Credit Report
Now, there are various ways you can go about reaching this goal. Perhaps, with any financial goal, however a good place to start is to begin by simply checking your credit report. This way you can see exactly where your credit score stands. It is at this stage that you can then identify which areas of your credit you may have neglected or fallen behind on, for example, late or missed payments, hard credit inquiries. etc.
Find Motivation to Pay Debt
Armed with this newfound credit report knowledge, next you can target which areas of your credit may allow you to improve your credit score overall – and in the most effective manner. It it also likely that at this point in time, if you didn’t already know this vital credit piece – you will see that having too much debt is causing problems with regards to the overall stability of your credit. This fact alone is just as likely then to fuel you with even more motivation when it comes to your debt repayment crusade.
Prioritize which Debt you will Focus on First (Credit Cards?)
If you have identified, for example that having a high credit card balance – or multiple cards for that matter are really dragging down your score, as well as a large contributing factor in the volume of debt you have – perhaps focusing your attention on paying down your credit card debt will also be the best first course of action. If this scenario seems all too familiar to you and you want to reduce your credit card debt by approximately 10% – you will then need some strategies to help you pay this down as promptly as possible.
Paying More than the Minimum Balance
The first credit card related-tip is to pay more than the minimum monthly balance on your credit card, as well as the month that follows, and so on. By paying off more than the minimum balance, this means you are actually paying off more than just the interest. Depending on your financial position, the exact amount you can pay above the minimum balance will vary. However, if you can aim for higher than this amount each time, this can assist you with your goal of increasing your debt payments.
Paying off Debt Before Saving
Another method of paying down your credit card debt – or any debt for that matter, is to focus on paying your debts off versus saving money. Of course, there are times when both actions will be possible, however not always – especially if you really need to lower your debts in a shortened amount of time.
Therefore, if balancing both is not a current option for you, in order to reach your goal of increasing your debt payments by 10%, then placing your plans of significant savings on the back burner temporarily is a good idea. It is at this point in time that you can really target your debt repayment, with the money you may typically be saving each month being used instead, to combat your debt.
When you think about it, reducing your debts as soon as possible means you are not only lowering the total amount of debt you have, you are also keeping your interest charges down as well. Credit cards especially, can be high in interest fees, so beginning with increased debt payments on your credit card accounts can give you the boost you need to start making progress on your path towards debt reduction.
Hopefully these tips and strategies can help to get you off on the right foot when it comes to increasing your debt payment this month. For anyone who has tried to pay down debts and has found it to be too difficult, perhaps they started out with a goal that was far too unreachable at that time. So again, it is smart to start with a more realistic amount as 10%, as you want to be sure you are instead, setting yourself up for success
Moreover, if you can think of some other ways to increase your debt payments, that is wonderful as certain methods will be more applicable to some individuals than others. The message here is to just start somewhere. Set a goal and work towards it. Good luck with your debt repayment plan and stay tuned for further tips on how you can reduce your debt, one step at a time.
