How to pay down your debts
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Hello-
Reading the reviews on Debt Cures over on Amazon, KT’s book is not getting very good reviews. Many of the people are going over his criminal record instead of the merits of the book itself. I don’t blame people for doing that especially if they were involved in some of his scams. But it kind of skews the reviews of the book and if it can help people get out of debt.
Today, I wanted to share some info about paying down your debts. I have some tips on paying down your credit cards and then I have some tips for paying down your mortgage.
How to pay down your credit cards
You cannot expect your credit card debt to vanish overnight in most cases. Paying down your debts is a process that is going to take some time. As long as you maintain your spending discipline and stay committed to getting out of debt, you’re more than halfway there.
You want to take the initial steps to getting the lowest interest rates possible on your credit cards. The only way you are going to get a better interest rate is to ask for it. There is nothing wrong with asking. Be persistent in your request too. Don’t just ask once and give up.
Debt Cures has some examples of how to reduce your interest rates on your cards.
Another way is to see if you can negotiate some of your debts down in the first place. Say you have $20,000 in debt but can settle your debt down to $15,000 or even $10,000 how much faster could you get out of debt? Check out this post for more about debt negotiation.
By now, you should know that you need to pay more than the minimum on your monthly payments. If you come into any extra money in the month, use that to pay down your debt. Make an extra payment to your credit card. With online payments available with most credit cards, this should be easy. You don’t have to write a check and mail it. You just log into your account and make that extra payment for $20 or $100.
I received my Discover card statement the other day and it had 4 payments on it. One was for the regular payment amount and there were 3 other payments - one for $30, one for $27 and one for $19.61. I kid you not.
And those little extra payments can add up.
If you think you don’t have any extra money to pay to your credit cards, you need to get creative. You can sell some of your unwanted or unused clothes, electronics, books, etc on eBay.
Just the other day my girlfriend sold one pair of her jeans for $60 on eBay. And they were used.
If you have any type of writing, programming, editing or designing talents, you can also do some freelance work to supplement your income.
Another idea to consider is to stop contributing to your investment accounts and use that money to pay down your debt. If you pay down your credit card that charges 15% interest, that’s just like investing and earning 15%. With the stock market the way it is now, that’s a nice return.
Those are some tips to help you pay down your debt, now let’s talk about your mortgage…
How to pay down your mortgage
There are only a few ways to pay down your mortgage faster. You can make biweekly payments which will basically mean you make the equivalent of one extra payment a year. Using this method, you could potentially pay off a 30 year mortgage in about 24 years. Here’s a biweekly payment calculator if you want to check it out.
You don’t want to pay a setup fee or any other type of fee to get this setup. Or I should say, you SHOULDN’T pay any type of fee to your mortgage company to do this. See if you can setup automatic withdrawal out of your account every two weeks to pay your mortgage.
Another way is to just add more money to payment to pay down the principal on your mortgage. If your mortgage payment is $1000, add an extra $50 or $100 to your payment and put a note that it is to pay down the principal.
The last way is to make sure you get the best interest rate in the first place with the lowest fees. Shop around, comparison shop and negotiate hard to get the best deals on your mortgage. In theory, you’re going to be there for 30 years so try and get the best deal you can. If it makes sense to pay extra to lower the interest rate then do so. I did this when I bought a home and it made sense to pay and extra $500 or $1000 to lower the points on my rate.
Another thing to keep in mind is that once you’ve paid off your credit cards and have some extra cash flow, it will be much easier to apply more to your mortgage payments so you can get it paid off quicker.
Let me know if this post has helped you, I appreciate any and all comments, good or bad.
Thanks for reading and have a great day!
-Adam
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