Paying Your Debt

Written by Lovelyn on January 23, 2009 – 5:25 pm -

Now that you know what you have coming in and what you have going out. You can start to make a plan to pay off your debt.

First, set some priorities. Take a look at your debt and figure out what is the most important to pay. These things are usually your mortgage, backed taxes or any court ordered payments. If you don’t pay these bills you could be kicked out of your home or put in jail. Other debt like credit cards, money you owe family members and student loans, in very desperate circumstances, you can let slide. I wouldn’t recommend doing this because it will ruin your credit rating and damage relations with family members, but if the choice is paying your mortgage or paying your Uncle Harry, you should pay your mortgage.

If you can’t pay all of your bills without getting into more debt, you should consider getting a second job. This is a real drag, I know, but you only have to keep the job until you get you’re debt situation under control. I would recommend going this route over not paying some of your debt. You’re second job doesn’t have to be a bummer. You could try to do something you enjoy. Maybe you have some things around your house that would fetch a good price on eBay.

Many times, credit card companies will work things out with you if call them and explain your situation. You can call companies and ask for your interest rate to be lowered. I’ve done this before and I found that it was quite easy to do. You can also work with your credit card company to come up with a payment plan you can afford. Making a simple call to your credit card company and getting these things done can make a big difference.

If you have debt on multiple credit cards, try consolidating them to one card with 0% percent or a very low interest rate. These low or 0% interest cards are only for a limited time. Once that time is up the interest rate can shoot up considerably, so only do this if you think you can pay down you debt sufficantly before that happens. If you can’t do that, you should work on paying off the one with the highest interest rate. Put any extra money you have towards paying that card off and while you’re doing that pay the minimum payment on the other cards. When you’ve paid that card off, take the money you were paying on that card and put it towards paying off the card with the next highest interest rate. Repeat this pattern until you’ve paid off your credit card debt.

Getting your debt paid off may be a long hard journey, but once it’s done you’ll feel great about yourself.

Photo by SqueakyMarmot

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