People with debt tend to find it intimidating when looking for a way out. Paying the monthly minimum payments won’t work. It seems like you’ll never pay off your debts. So you assume the best course of action is to not think about it.
That is definitely not the right course of action.
Although there are no instant solutions, there are options. Some of the best ways to pay down debt are effortless. Here are a handful of the best ways to pay off debt.
Renegotiate Interest Rates
A simple method to lower your debt is to renegotiate the interest rates on your credit card. Contact a customer-service representative and explain that you are upset with your current interest rate. State that you are calling to find out if there is a way to get it reduced. Ask for a supervisor if the customer representative says no.
Here are some other techniques for the best ways to reduce debt.
The Snowball Approach
Massive snowballs start with a handful of snow. Similarly, debt reduction can start small and gradually build momentum. You start by paying off your smallest debt first, and continuing until you pay off your largest debt.
First create a list of your debts and the amounts you owe on each, from least amount to largest amount:
$455 store charge card ($45 payment)
$2,000 medical bill ($60 payment)
$5,250 credit card ($140 payment)
$12,000 student loan ($226 payment)
Begin by making minimum payments on all your debts, except the one with the lowest amount —store charge card. For this debt, each month pay as much as you can. When that debt is paid off, take the next debt and redo the same steps. Put as much money as you can toward the monthly payment of the next lowest debt —medical bills. Follow these steps until you pay off your largest debt —student loan.
Biweekly Mortgage Payments
There are other options that offer some of the best ways to reduce debt for large amounts. A good course of action to gain huge savings and financial comfort is the biweekly mortgage payment plan.
With this process you pay half your regular mortgage payment every other week, instead of the entire payment once a month. You’ll end up paying 13 yearly payments instead of 12.
Your mortgage payment will increase by 1/12th, but the additional money reduces your principal. You never pay interest on parts of the principal you pay off early. The amount you save can be significant.
With a 30-year mortgage for $272,000 at 4.25% APR, the additional mortgage payments can save you more than $34,000 over the span of your mortgage. It could be possible for you to pay off your mortgage five years early! Biweekly payment plans are also available for other loan types.
Making biweekly payments can be extra work, but AutoPayPlus can make it easier for you. It will make sure your payments are made in a timely manner and ensure they are appropriately applied for the best debt-reduction advantage. To find out about biweekly payments and how they are one of the best ways to pay off debt, call us at 877-740-0524 or click here.