We all want to escape our debt, and having some debt consolidation strategies may help. However, debt consolidation is actually much more attainable than you might have previously thought it. You don’t have to let your debt control your life and financial trajectory forever. Taking your outstanding debt, consolidating it in one place, and working slowly but surely to eradicate it is a very real possibility for you in the coming year.
Debt Consolidation Strategies
If you’re looking to get yourself out of debt once and for all, here are 5 ways to conquer the mounting debt:
1. Debt Consolidation Loans
There are loans specifically for this problem. This loan can encompass a much wider range of debt, and can be a great thing if you’re trying to combine your credit card, personal loans, and any other outstanding debt into one payment. However, if you consider this option, it will have a negative impact on your credit score.
2. Balance Transfers
A balance transfer is essentially when you transfer your current credit card debts into a new one, mostly due to a lower interest rate in the new account. This will enable you to consolidate the debt in one singular place, as well as lessen the number of due dates you have to manage on a daily basis. When searching for a balance transfer card, first add up the current debts you owe, as well as the interest rates and late fees – then do the math.
One of the most responsible ways to counteract your debt problem is to also focus on your savings and how you can be more vigilant with your money. According to GoBankingRate, 62% of Americans have less than $1,000 in their savings account. If you’re someone in that category, it’s time to reconfigure your budget so more money is being put away for your payments. Create a plan within your budget to set aside a certain percentage of your pay. The more you save, the more debt repayment you can pursue in the year to come.
You’re probably wondering: if I am carrying around debt, why on earth would I be looking at investing? Although it sounds dangerous, investing in the stock market can actually be a long-term strategy for getting out of debt. It’s not a get-rich quick scheme, but over a 5 to 10 year period, it can help you expand your monthly income so you can really get ahold of your debt.
5. No More Excess Spending
No, you don’t need that new watch from the mall this week. Sit down and make a budget that prioritizes the necessities, first. After all of that has been configured, you need to ensure you are also saving. Once that’s done, whatever is left over may be extended to excess spending. But only then is it allowed and permissible. You need to be strict about this.
Although you can’t “escape” your debt, you can certainly start to manage and diminish it for a brighter financial future.