You want to travel more but that mountain of debt is holding you back. And with each month that passes, the balances continue to grow. Looks like it’ll be awhile before your dreams of traveling more will become a reality.Photo by Michael
A better idea: commit to breaking up with debt so you can free up funds to travel more.
Make a plan
If you want to get out of debt, you’ll have to make a plan and stick to it. Otherwise, you’ll end up telling yourself at the beginning of every month that you’re going to put extra on a certain credit card or loan. And it may never happen because you’ve already spent the funds on something else. Or you can set a goal, figure out how much you’ll need to allocate towards debt payments each month, decide on a method and execute.
Fund your debt-payoff account
What good is a plan to pay off debt when you don’t have the funds to make it happen? That’s where your creative side comes in. Brainstorm ways to make some extra dough using the gifts you already have. Also, consider taking on a part-time job if time permits. And you should take a good luck at your budget to figure out where cuts can be made to free up funds.
Enroll in a payment plan
Some creditors offer payment plans to help strapped customers stay afloat. Even if you haven’t missed a payment, it’s worth reaching out to the creditor to see about enrolling. They may be willing to reduce the monthly payment or suspend the accrual of interest for a short window of time. But be sure to use this time frame wisely to get ahead.
Get a balance transfer credit card
If you have good credit, you may qualify for a balance transfer credit card. This is another effective way to save on interest and get out of debt quicker. But here’s the catch: you must pay the balance in full before the introductory period ends. Otherwise, the interest will be retroactively applied. Furthermore, refrain from using the other credit cards or you’ll end up with even more debt.
Apply for a debt consolidation loan
Debt consolidation loans allow you to roll all your existing debts into a single account. This could save you hundreds, if not thousands of dollars, in interest. Plus, it streamlines the debt repayment process and helps you avoid late fees since you’ll be paying a single creditor each month.
Commit to your spending plan
It’s practically impossible to get out of debt without committing to your spending plan. Why so? Following a budget helps keep spending in check so you won’t dish out more than you have and rely on debt to make ends meet. Plus, an effective spending plan will help you beef up your safety net so you won’t have to dip into your debt-payoff fund if a financial emergency comes up.
Renegotiate interest rates
Did you know that you may be able to negotiate the interest rate on your credit cards? If your credit score has improved since you opened the account, ask to for an APR reduction. It may also be worthwhile to refinance existing loans you have for lower interest rates so you can pay off the balances faster. (A quick note: refinancing may stretch out the loan term, so continue to make the higher payment to reduce interest paid over the life of the loan).
Make it fun
Paying off debt is a tough but rewarding experience. But you can make it fun by launching a challenge and incorporating incentives along the way. You may shed a few tears, but it’ll be worth it and your wallet will thank you. Best of all, you’ll be able to travel more.