Do you want to go debt-free in just one year or less? Then, worry not as there are some things that can be done for you to completely eliminate your debt or pay off a big part of it at most in just 12 months or even less.
Below are a few strategies and tips you can try to kick-start your debt-free life:
Use Your Savings to Pay Off Larger Debts
Never be hesitant to use a chunk of your savings to pay off debts with high-interest rates. Using your cash reserves to pay debt is one of the smartest decisions you can make since it will stop increasing the interest on large balances. Even though it might feel reassuring if your bank account contains some cash, in reality, these funds don’t really work for you, especially if you consider the low-interest rates these days. Just make sure that your savings are not completely depleted. If you have a pile of cash stash somewhere, you can use these funds to pay off your bills.
Augment the Percentage of Your Debt Repayment
Allotting at least 15% of the paycheck of your income from pensions or Social Security to your loans and credit card debts can help you pay your obligations faster since many credit card companies just ask you to pay around 2% of outstanding balance every month. When you make small minimum payments, your debt balances collect interest every month or year. Paying off big chunks of your debts in a matter of months can save you significant cash on your interest payments.
Negotiate for Lower Interest Rates
Negotiate lower interest rates with your creditors. You will be surprised that most creditors are actually willing to lower your interest rate depending on your account standing and payment history.
If you were able to maintain a nice relationship with your creditors for several years, you will be in a better position of being qualified for lower interest rates. It helps you save cash on your interest payments when paying down your debt within a year.
Earn Cash by Selling Stuff
List down the items you can sell at a garage sale or on Craigslist or eBay. Earning some extra money through selling stuff no longer of use to you or you are ready to let go and using the proceeds for paying down your debt will help you reduce your financial burden in no time at all.
Pay Your Debt with Tax Refund
Although it can be quite tempting to go on a quick getaway or splurge on an expensive item with your tax refund check, you can use the money smarter by paying down some or even all of your outstanding debts. Consider how great it will be to lower your payments every month with this payoff strategy with just a single lump sum. You will surely love the perks of having lesser debt load throughout the year and even for the years to come, something better than a short-term enjoyment of purchase or vacation.