The Fastest Way to Pay off a Huge Debt

When you started college, you were lucky enough to obtain a Discover Card.  Your mother told you to only use the card in emergencies. In college, emergencies were sometimes classified as a one day only shoe sale or much needed groceries.  
Unfortunately, the reality is that most of us find it difficult to note use credit cards “burning” in our pockets with “free money.”  One day, you wake up, and your debt has snowballed out of control. Reckless use can pile up quickly, and you’re left with creditor calls, a low credit score, and scrambling to think of ways to pay the debt off.  
If you are patient and use practical methods, you will be on track to paying off that debt quickly

How To Pay Off Credit Cards

Credit card companies are making exorbitant amounts of profit on consumers’ debt. If you currently have $10,000 on your Visa card, it is very likely not the result of one or two transactions. That $100 worth of clothes turned into thousands of dollars of interest.

To tackle that credit card debt, first examine your credit cards and their interest rates. Map out a plan to pay those cards with the highest interest rates first, while continuing to pay the minimum payment on the lower rate cards. Minimum payments can range from 2-4% of your balance. The most effective method to tackling credit card debt fast is to increase your payments on those cards with the highest rates to quickly reduce your outstanding balance. Paying an extra $50-100 a month can reduce the amount of time you will be in debt.

Some companies feature special rates, such as 0% for 12 months. If you can find a low-rate card, transfer that high interest balance, which ensures that your monthly payments will be applied to your principal rather than the interest, which keeps your balance dropping. 

Call your creditor and explain your situation. If you have fallen on hard times, but have otherwise had a splendid payment record, speak up! They may be able to restructure the debt or lower your interest rate.

You can also try contacting a credit counseling service. They offer services like budget planning, financial counseling and debt management plans. They can sometimes negotiate a lower interest rate on your behalf.  However, keep in mind that one drawback is that being in a debt management plan is reflected on your credit report for several years and may prevent you from securing a loan in the future.

Another option is debt settlement. These services negotiate a lump sum with your creditors rather than monthly payments. This could reduce your debt by 40% to 60% of your balance in 12 to 36 months. It’s a quicker and cheaper method than filing personal bankruptcy, but it will damage your credit while in the program and for several years afterwards.

The Best Way To Pay Off A Mortgage

Depending on your loan and financial institution, an extra mortgage payment a year can get you out of debt 6 to 8 years earlier. By paying bi-weekly, you are actually making 13 monthly payments instead of 12, reducing your interest and principal.

How To Pay Off Student Loans

Consolidate your student loans if you haven’t already done so. You won’t necessarily get a lower interest rate, but at least you will only have to make one payment. If you’re eligible for deferment, postpone your payments for 12 months if you are having hard times. Or get someone else to pay your debt. Volunteering for Teach for America or Peace Corps makes you eligible for grants to help pay off your loans.

Get Creative

Change your lifestyle. Start brown bagging your lunch, use coupons, buy in bulk, or shop at thrift stores. Better yet, if you can, get another source of income. Apply for seasonal help during the holidays or run errands for people.