Carrying a heavy debt load for many years can prevent you from truly enjoying your money. Large debt payments can make it impossible to save for retirement, and the pressure of all those bills can tie you to a job you don’t enjoy. That’s why making paying off debt a priority can be hugely rewarding.
If you have a lot of consumer debt -- a car loan, several credit cards, maybe a line of credit -- your first step is deciding on the best strategy for paying it down. If you’re not carting around much high-interest debt, you can turn your attention to your mortgage. After all, although your home loan probably has a lower rate than any of your other debts, you’re probably still paying thousands of dollars a year in interest.
Of course, all debt-reduction methods require coming up with extra money each month. Where are you going to find it? One way is to reconsider the car you’re driving. If you’re leasing or buying new wheels every four years, you can save a bundle of money by choosing a used vehicle instead. If you’re a two-car family and you live in a city with good public transportation, you might consider getting rid of your second car. What you save in car payments, gas, parking, maintenance and insurance will allow you to direct hundreds of dollars toward your debt every month.
Once you pay off your car loan, a great way to save for your next car or other large purchase is to put the same monthly amount you were paying the lender into a high-yield savings account. Since you’re used to not having that money anyway, chances are you’ll never miss it and you’ll be surprised how fast it can grow.
In addition to these methods, using a debt professional to assist you in your efforts to pay off credit can have a huge and positive impact on your financial situation as well. When all is said and done you’ll find you have a new lease on life and will be able to build up a nest egg for yours and your family’s future.
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
