Tips for Getting Out of Debt
Getting out of debt is not quick nor is it easy, but with persistence and dedication it can be accomplished, and can bring peace of mind and financial stability.
Here are a few ways to get started:
- The first step is knowing how much you owe. Gather all your most recent credit card statements and loan information, sit down with a pencil and paper, and write down the balance of each debt and the interest rate charged.
- PowerPay from the Utah State University Cooperative Extension is a great, free resource. In the PowerPay section you can enter in all your debt information and create your own debt repayment plan. The site also features informative articles and calculators.
- There’s no one right way to pay off debt. Some people like to pay off the smallest debt first and then use the money they were paying on that debt toward the next highest debt. Other people pay off the debt with the highest interest rate first and then attack the debt with the next highest rate.
- Pay more than the minimum payment each month. The minimum payment is only 2-3% of the total balance. At that rate, it can take you years to pay off even a small debt, and you’ll be paying a lot of interest charges. Use an online calculator like those on PowerPay to see how additional payments will save you money and pay off your debt quickly.
- Don’t create more debt. Stop using all your credit cards except for the one that gives you the lowest interest rate. Don’t use that credit card unless absolutely necessary.
- Canceling your credit cards may negatively impact your credit score, so lock them up or cut them up but don’t cancel them.
- If you need guidance creating a budget or a debt repayment plan, you can visit your local installation’s Family Readiness Center or Military OneSource to get free help from a financial counselor.
Continue to do this until all your debts are paid off. This may take a few years, but don’t get discouraged. The feeling you get from being debt-free is priceless!
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Written by Lila Quintiliani
Published: 18 September 2019