5 Simple Ways to Pay Off Debt

Many Americans have still not changed their mindset and financial behavior. Stock market volatility, administration changes and federal and state regulatory changes should make everyone improve their financial behavior. Many Americans allow fear to cause them to make hasty decisions. Don’t let fear lead you to make a decision you will regret in the future.

If you owe debt and have the money - pay it off. Forget about the rumors that others have said about keeping a balance on your accounts. Paying off debt will help you maintain a good relationship with your creditors, stop those harassing calls, increase your credit score and reduce financial stress.

To pay off debt you have change the way you think about money.  Money is a tool that can be used either to generate debt or to generate wealth. There are several ways to get out of debt. Use these five simple ways to pay off debt, increase your credit score and improve your financial life.

TRACK SPENDING

A budget helps you identify your total monthly income, how much you owe and how much you spending each month. A budget also quickly identifies areas where you may need to reduce spending. Use online banking or automatic paycheck deduction to pay bills. 

SPEND LESS

Buy needs vs. wants, control your spending, don't buy in excess or more than you need, keep debt (excluding mortgage or rent) at 15% of your total monthly income (after taxes). Keep rent/mortgage at 30% of your total monthly income. Reduce expenses by 30-50%. Delay purchases until you have the cash to purchase them.  

PAY IN FULL

Pay the balance in full each month prior to the due date or as soon as you receive the bill, which helps to avoid, paying finance charges. This also reduces your chances of going into debt and making late payments. 

PAY MORE THAN ONCE

Many consumers do not realize that they can send in payments for their debts multiple times a month.  Pay half of the bill balance with first paycheck of the month then pay the remaining balance with second paycheck of the month. Pay weekly instead of monthly or pay the minimum monthly payment the first week after you get the bill. Then each week pay as much as you can toward the monthly balance and repeat every month.  

PAY MORE THAN MINIMUM MONTHLY PAYMENT

If you pay the minimum monthly payment, you will end up paying 2 to 3 times what you actually purchased due to finance charges that accrue on your balance. Send more than the minimum monthly payment each month.

STOP CHARGING

Keep credit card balances at 20% or below the credit limit.  Having accounts with balances above the credit limit will decrease your credit score and may increase the chances of your credit limit being reduced or your credit card account may be closed.