If you are currently in debt or if you are ever in debt, you know how debilitating it can be. Its psychological impact aside, debt also has the ability to drive your credit score to the ground and affect your ability to secure significant debts.
It is possible that you are seeing a mountain of debt in front of you and thinking, how am I ever going to get out of this? Fortunately, there are many ways to pay off debt and get it back on track. Today, we are going to show you 18 ways to pay off debt fast.
The personal debt hits an all-time high in the US
Now at a record of $ 4.1 trillion (as of September 2019), consumer debt has skyrocketed past levels, including the 2008 financial crisis. Meanwhile, total household debt, which is also for mortgages, has grown to about 14 million trillion.
For an even greater perspective, consider that the total US debt is $ 136,355 in total debt. When you factor in poor spending habits and interest rates, the nature of debt keeps increasing; And the only way to combat debt is to be stable in your effort to reduce it.
18 ways to pay down debt fast
You may be struggling with a particular type of loan, or you may be battling multiple accounts just to stay.
Whether you are stuck with student loan debt or the outstanding balance in half a dozen credit cards, here are some tips that will help you pay off the loan faster.
For many young adults, student loan debt is their introduction to the world of lending. In fact, 44.7 million Americans take out student loan debt.
Student loan debt over the course of four, six, or even eight years has the potential to financially cripple people for the next 20+ years of their lives. Fortunately, there are some ways to take action.
1. Refinance Your Student Loan
If you have student loans with high-interest rates, paying off your debt can feel like a swim against the tide – two steps ahead, with each passing month adding interest begins.
One of the best solutions can be to refinance your loan. Refinancing a student loan is the process of getting a new loan with a lower interest rate and better terms for converting a loan with a higher interest rate. By refinancing, you can potentially save thousands of dollars on your student loans.
While you may recognize that this is a lengthy process, there are a handful of tools online that will help you get new lending options within minutes – all of this without negatively increasing your credit score without hard work Affects.
Reliable and Figure are two great refinancing options:
Reliable: Credible has helped millions of American refinances with their student loans, taking advantage of the “excellent” rating in nearly 3,000 reviews on TrustPilot. In just two minutes, you can get a maximum of 10 offers from top lenders. If you can find a better rate elsewhere, Reliable promises $ 200, with a “Best Rate Guarantee”. The device is fast, free and easy to use. Get Personal Student Loan Refinance Option Through Reliable!
Picture: Using Chitra’s paperless application tool, you can get a personal lending option in just minutes. The picture provides a dedicated support team to help guide you through the steps or answer any questions you may have. Refinance options come without prepayment or origination fees, and you are also given a 12-month restriction period if you need it. Learn more about the refinance process with Chitra!
2. Claim tax credits and deductions
As long as you enroll in a qualified institution and meet certain other qualifications, you can get tax credits and deductions. Most notably, you may be eligible for the American Opportunity Credit or the Lifetime Learning Credit.
With the American Opportunity Credit, you can claim up to $ 2,500 per year for the first four years of secondary education – 40% of which is refundable.
With Lifetime Learning Credit, you can claim up to $ 2,000 per year after secondary education. This includes any undergraduate and graduate degree courses, as well as other postgraduate courses.
While these tax benefits are unlikely to match or exceed the amount of your student loan, they will certainly help you to recover some of the costs.
3. Pay during the grace period
If you have unbalanced student loans and are given a grace period during which there are no obligations to make any repayments, consider the amount you can save by making some payments towards the principal.
Taking it during the grace period of your loan (usually six months) can provide some temporary financial relief, but moving forward during your grace period will result in the following consequences:
Less interest is charged on your balance
Lower capital interest applies to your balance
Your student loan debt is repaid faster.
credit card debt
Each year, more and more people become one of the country’s major crises – credit card debt. When credit cards, when used responsibly, are useful tools for creating credit, they also present a trap for impulsive buyers.
Credit card interest rates are much higher than rates in most industries. So, the reality is: When you are deep in credit card debt, you have a problem on your hands.
If you deposit a very small amount of credit card debt, here are some solutions that will help stop the bleeding.
4. Use a personal loan to pay off your credit card debt
Do you have credit card debt with a high interest rate? If so, keeping a month-to-month balance can actually cost you dearly.
You can use a personal loan for many different purposes, but you can also use it to pay off your credit card, consolidate the loan, and eventually pay on an account with a lower interest rate. This simple adjustment has the potential to save you thousands of dollars on your credit card debt, and checking credit options will not affect your credit score either!
Here’s how it works:
Apply for a personal loan and get an offer (it takes a few minutes).
Accept a personal loan that has a lower interest than your credit card debt.
Use a personal loan to pay off your credit card debt.
Now pay the cheapest interest rate on your personal loan, and skip this month’s credit card bill!
The three top options for personal loans are Reliable, Fiona or Upstart:
Reliable: In two minutes, reliable options for new personal loans will be returned to 11. Results are quick and free; And once you close a deal, most lenders are able to fund your loan the next business day. Discover your personal loan options through Reliable!
Fiona: After answering some questions about your income and credit score, Fiona will return the top option that is considered most appropriate for your situation in 60 seconds or less. The service is completely free, safe and secure. Check out some of your personal loan options through Fiona!
Upstart: Within five minutes, Upstart will collect personal loan options, based not only on your credit score but also on your education and experience. On closing a transaction, you will receive your funds as soon as the next business day. On TrustPilot, the service has a 5-star rating in over 5,000 reviews. Upstart loans are not available in WV or IA. Get Personal Loan Results Through Upstart!
5. Appeal for a rate cut
If you are unhappy with your credit card APR and are up for a challenge, consider negotiating with your credit card company at a lower interest rate.
As long as you demonstrate some level of credibility and prove that you are not a high-risk debtor, your credit card company may be willing to compromise with you.
While it may be unrealistic to expect a 10% or 15% interest rate cut, you may be able to take advantage of a few percents. But when it comes to credit card debt, even the smallest APR adjustment can save you thousands of dollars in the long run.
6. Use a Better Credit Card
Although it is not only the credit card but, the borrowing habits that cause you to go into debt, the interest rate on your card cannot do you any favors.
If you own multiple credit cards or are in a position to get a credit card with a lower interest rate, consider getting a card that also has a 0% intro APR on balance transfers or waived fees. This allows you to move your balance from card to card with a higher rate, with a lower rate at no charge.
See the top option for the balance transfer card.
Also, if you have at least a respectable credit score, consider getting a credit card that offers cash back rewards, such as the Platinum Rewards Credit Card from Amalgamated Bank of Chicago (ABOC). With this card, you’ll earn a $ 150 statement credit after spending $ 1,200 in your first 90 days, and you’ll also earn one point per dollar spent. The Platinum Rewards Card has a 0% intro APR on purchases and balance transfers, and the card comes at no annual fee.
For more top cashback rewards cards, click here.
7. Monitor your credit with Credit Mole
Your ability to get a loan with better terms depends largely on your credit score. If you are sitting in the subprime sector, then you will have difficulty getting a loan without a high-interest rate. Therefore, it is important that you keep an eye on your credit and make sure that it is moving in the right direction.
If you have not checked your credit score in a while or it is difficult to get updates or accurate scores, then monitor your credit with Credit Mole.
In 2019, the average mortgage loan is $ 202,284, meaning that, if you have a mortgage, it is the largest of all your loans. But it also means that it offers the greatest potential for savings.
You can pay off the loan faster with a few different adjustments and save money in the process. Let’s take a look at them.
8. Refinancing Your Mortgage
Even if you think your mortgage loan has a reasonable interest rate, chances are you can get another loan with a lower interest rate and better terms.
The process of replacing your current mortgage loan with one that is more cost-effective for you is called a mortgage refinance. Many experts believe that even a 1% interest rate reduction is enough to encourage you to refinance your mortgage.
There are a few different tools online that can help you get a better mortgage loan quickly without affecting your credit score.
Excellent options include Loan Depot and Figure:
LoanDepot: With over $ 70 billion in refinancing, LoanDeport has a track record of finding home loans for homeowners across the US with better terms and lower interest rates. As a loan in eight days. Fill out a questionnaire and get a refinance option through LoanDipot!
Figure: With a few minutes to fill a digital application, you can get a mortgage refinance option via Figure with the ability to close a deal in 10 days. By getting a cash-out loan, you will be able to get a large amount of money from your original mortgage loan. You can use this money to consolidate other loans and tie them at a lower interest rate. Start the refinancing process with Figure!
9. List unused space on Airbnb
When you are busy paying your mortgage, change your unused space to AirBnB to make some extra cash. The process of listing your location is quick and easy, and Airbnb even provides the host with protection from property damage and poor customer behavior.
Especially if you have an area or floor of your house that is well kept and attractive to potential renters, you can make great money through BJBNB. Using Airbnb’s estimation tool, you can also get a quick idea of what your potential earnings as a host might be.
10. Remove Private Mortgage Insurance (PMI)
If you are a new homeowner, you are probably aware of the additional costs associated with private mortgage insurance (PMI).
Unless you have made a down payment of 20% or more, you are probably working with PMI, which can be .5% – 1% of your loan amount annually. If your mortgage is $ 200,000, it means that you can expect to pay an additional $ 1,000- $ 2,000 each year.
However, PMI is usually only required as long as you do not pay 80% or less on your home loan.
So, what is the key here? Paying 20% of your loan, absolutely. If possible, make a large payment or extra payment quickly, so that you can eliminate the PMI altogether.
11. Challenge Your Property Valuation
Property taxes are determined by the value of your home. Therefore, when your home valuation revolves around, it is in your interest to get a proper appraisal of your home to keep your property bill low.
According to the National Taxpayers Union, about 30% – 60% of taxable property is overvalued, but less than 5% of property owners ever argue their assessment.
If you have received a poor assessment, take steps to challenge the assessment so that your tax bill is manageable each year!
12. Modify Your Loan
If you are really struggling to make your mortgage payments each month or are projected to be behind in the future, you can consider a loan modification. This adjustment can ultimately help you avoid procrastination and, ultimately, foreclosure.
With a loan modification, you agree to the new terms for your mortgage so that you are better positioned to make your monthly payments. However, keep in mind that modification and refinancing are not the same. While refinancing involves working with a new lender, a loan modification involves your current lender. Therefore, with loan modification, the lender is usually only willing to make the amendments that will benefit them.
In many cases, the homeowner applying for a loan modification ends up in a worse situation because of it. For this reason, it is wise to seek professional advice to determine if a loan modification is a beneficial option for you.
Because a car is a depreciation asset, it is likely that your car may be of little value until the time you turn it off. If you are debating whether your car is even worth the hassle, then take steps to reduce your auto loan debt soon.
13. Refinance Your Auto Loan
We all love the thrill of driving a brand new car from the dealership lot. Amid the adrenaline rush, however, many buyers take auto loans that are sure to come back and bite them down the road.
If you suspect that your current auto loan is costing you hundreds or perhaps thousands of unnecessary dollars, one solution is to refinance your auto loan. Through refinancing, you can replace your current auto loan with better terms and lower interest rate offer, which will result in saving you a ton of money.
A great place to get a car to refinance option is myAutoloan.com. Just fill out a short questionnaire and you will receive four offers in minutes. Compare interest rates and monthly payments and determine that refinancing will save you money on travel. The service is free, quick and easy to use. See all your refinancing options with MyAutoloan.com!
General debt repayment tips
Regardless of the type of debt you are dealing with, there are strategies that you can employ and various adjustments you can make to get that loan. Let’s look at some of the most effective ways to pay off any type of debt.
14. Pay off debt fast when possible
Whenever possible, it is in your best interest to pay off the loan fast.
While it may be tempting to keep a little extra money or add more money to your savings account in case of an emergency, it is usually not a wise move when you are sitting on a significant amount.
Because every time you pay interest on your loan, you lose money. As long as your savings account interest rate is higher than your other accounts (which is unlikely), you cannot save enough for yourself that you are losing through debt.
15. Snowball Method: Pay off the loan with the lowest balance first.
If you are managing several types of debt, then you should come up with a plan to repay your loan strategically.
One of the most common approaches is called the snowball method.
Suppose you have three accounts:
$ 500 credit card bill
A $ 1,000 credit card bill
$ 12,000 auto loan
Using the snowball method, you first pay your minimum balance and monthly payments, and then any extra money you spend on debt goes into your smallest account – a $ 500 credit card bill. You will then work on a $ 1,000 credit card bill and finally a $ 12,000 auto loan.
The snowball method is often employed due to its psychological benefits. You will see your small accounts paying in full, and this will inspire and motivate you to deal with your larger accounts.
16. Avalanche Method: Pay the loan with the interest rate first.
Another method commonly used to deal with debt is avalanche method.
Using the example above, consider the interest rates in each of your accounts:
$ 500 Credit Card Bill: 6% APR
$ 1,000 credit card bill: 15% APR
$ 12,000 Auto Loan: 8% APR
With Avalanche Method, you will pay your minimum balance and monthly payment first, and any additional money will go towards the account with the highest interest rate. This means that you will work before paying your $ 1,000 credit card bill, followed by your $ 12,000 auto loan and then your $ 500 credit card bill.
Avalanche method allows you to pay off all your debts in the fastest possible way. Low interest ultimately means less debt, so eliminating your high-interest accounts provides the fastest path to a debt-free lifestyle.
17. Start a party movement to earn extra income
If you want to earn extra income, in the past, you have to go out and get another job. Today, there are a lot of sided ideas that will allow you to use your own tools and resources to make money.
With your car alone, you can start several side hustles that add significant money to your total income.
18. Cut unnecessary costs
When you are thinking of ways to generate additional streams of income through one or two parties, also consider that there are ways to save money by eliminating unnecessary expenses from your budget.
This will not only put more money in your pocket, which can be used to pay off the loan, but it can also limit your credit card usage.
Eating outside may just be the biggest budget killer. It is not only expensive to eat regularly (especially once you add tax costs and a tip to your meal), but it is also very convenient. Eating a few times a month can easily change five or six times a week, if not closely monitored.
Insurance should also be a budget killer. You don’t have to skimp on coverage to get a competitive, cheap rate. Get quotes from several companies, participate in rebate programs (ie paperless, good students, etc.), and consider paying up to six months in advance.