Finacial Tips

Easy Steps That Are the Best Ways to Pay off Debt

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.


Smart Tips

5 Ways to Put Money into Your Savings

Finding ways to start a savings account nowadays seems like an almost impossible task. It can be done, with a bit of work and creativity. Here is a review of five ways to find money for your savings according to the Federal Trade Commission.

The first step is to have a clear idea of how much money you are bringing in and the amount you are spending. First create a list of your income sources, such as weekly paychecks, odd-jobs, or money from hobbies. Second make a list of your fixed monthly bills such as mortgage, electricity, and cell phones. Last write a list of other expenses such as gifts, haircuts, clothing, and your daily latte on your way to work. Small purchases can add up. These lists will give you a picture of where your finances are at.

The second step is to pay yourself first each paycheck. To make this easier set up an automatic deduction from you paycheck into a payroll savings plan, or an automatic transfer from a checking account into your savings. This step creates a routine for you to add money to your savings. This will increase your earnings quickly.

The third step is a bit formidable, don’t let that concern you. It’s doable. It just takes a bit of learning about compounding interest. According to The Federal Trade Commission compounding interest is “the interest you earn on your initial investment plus all the interest that accumulates over time.” In interest accounts there are simple interest and Compounding interest. Simple interest is when you earn interest on your initial investment only. Compounding interest is the better choice. Yup, it’s that easy.

The fourth step is finding “Extra” money. As an example, when you get a raise you can take that “extra” money from each paycheck and have it go into your savings. Or when you pay off a credit card debt you can take the monthly payment you would have made and have that go directly into your savings. To make it easier, you can have these payments automatically transferred from your checking account to your savings.

The fifth step is about being creative in ways to save money. Any money you save can go into your savings account. Some unique ways to save include having local beauty school students do your hair. They will often do this for free or at a reduced cost. Your local library has free books, music and DVD’s you can borrow. Bartering is another possibility. You have skills and items that people need, and people have skills and items you need. It’s all free and fun.

Starting a savings can be easy with a little thought and a bit of work. Go ahead and enjoy your latte on the way to work, just do it once a week as a treat. With this simple step you could be saving yourself over fifty dollars a month. That’s fifty dollars a month that can go directly into your savings account to pay off important things like student loan debt.