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Being in debt is no fun especially if you don’t know what to do about it. The Montley Fool reports that 80.9% of baby boomers, 79.9% of Gen Xers and 81.5% of millennials are currently in some kind of debt. Those numbers should be alarming to you since that reflects that 8 out of every 10 people are in the hole. Many people are purposely living within their means and their credit card is their best friend where others were forced into debt by unforeseen job changes or medical bills. No matter the reason, you need to get out of debt fast but how? Check out our 5 tips to help you get out of the red and back on track financially.
First and foremost, stop using your credit cards. You will never get out of debt if you are constantly accruing more. Cut up(or close) all your credit card accounts, especially the high interest ones, and keep one for a major emergency if you must.
Look around at your budget and what you are spending your money on. No you don’t need those new shoes that came out this fall and you don’t a monthly massage. Be honest with yourself about the things you spend money on and decide if you really need to be. The extra money you will save adds up quick and you can use that money to start chipping away at your debt.
Bite the Bullet
Once a year we usually all get a tax refund of some sort or maybe you get a large quarterly bonus at work. As tempting as it might be to take an European vacation with the large sum of money, don’t do it. Bite the bullet and apply ALL of the money to your debt. Doing this a couple of times and you will start to see a huge decrease in your debt.
Refinance your mortgage or auto loan
A great option to free up some extra money that you can apply to paying off your debt is to refinance your mortgage or car loan. Try to snag a better interest rate on your new loan and you could end up lowering your monthly payment for your home, vehicle, or both. While you don’t really want to accrue new debt, sometimes you have to in order to get in that new house or refinance your current mortgage so don’t let bad credit stand in your way! You can always look at bad credit loans if you fall into this category.
If your debt is high you might want to think about trying to settle some of them. Creditors will usually always settle with you because they would rather get something over nothing at all. It never hurts to ask because all they can say is no but more times than not, they are very willing to work with you. A friend of mine owed $1000 for an old medical bill she didn’t know she had. When she called the creditor, they let her pay 1/2 of what she owed and she was able to close the account without any more negative marks going on her credit report.