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How to Get Out of Debt & Easy Ways to Do It

 Thursday, January 30    CCCU
How to Get Out of Debt & Easy Ways to Do It

7 Tips On How to Get Out of Debt

Getting out of debt faster may be easier than you think. Read about seven ways to reduce your debt and learn how to understand and execute the basic strategies to save you money.

Debt is a stressful burden to carry at any size for any individual, but you’re not alone. On average, most US households owe over $8,000 in credit card debt, while college grads typically owe almost $30,000 in student loans. So, how do you get out of debt? At Consolidated Community Credit Union, we’re dedicated to helping you and our members maintain your financial health by offering the best strategies and tips for getting out of debt.

How to Pay Off Debt the Smart Way

1. Go cold turkey with credit cards

We always tell our credit union members that the first step to reduce credit card debt is to stop accumulating more. However, we know that’s easier said than done. If you tend to fall back on your credit cards to cover unnecessary expenses, the best strategy to overcome your debt is to stop using them altogether –– at least for a while. Try leaving your credit cards at home or hide them away if you want to avoid the temptation of shopping online or using them altogether. 

2. Build a savings account at your local credit unionBuilding a savings account will prevent you from going deeper into debt while also giving you an emergency safety net.

While you might think you should be using all of your available funds to pay off your existing debt, saving money is crucial. Building a savings account will prevent you from going deeper into debt while also giving you an emergency safety net. When you have a savings account –– particularly an emergency fund –– you’ll be able to use the money for unanticipated expenses that will prevent you from going into more debt if life hits you with an unexpected event.

3. Pay more than the minimum payment

When things get tight, sometimes all you can afford is the monthly minimum payment. However, taking the longer route means paying much more in interest over time. If you can manage it, try to pay more than the minimum amount due on at least one of your accounts to reduce what you owe quicker. When an account is paid off, start making higher payments on another one as a strategy to expedite things. Continue this process until you’re down to one account, and pay as much as you can each month until you’re debt free.

4. Make additional small payments

Along with paying more than the minimum amount due, making additional small payments on each of your accounts can be beneficial. Doing so allows you to accumulate less interest overall. Also, you’ll improve your credit score by chipping away at your total credit utilization. So, in addition to making your regular monthly payments, you may want to schedule another small payment on each account as an added bonus. Even an extra $10 or $15 each month will make a big difference in your journey towards going debt free.

5. Focus on paying off one account at a time
Another strategy to reduce your debt is to focus on paying off one account at a time by making larger payments.
Another strategy to reduce your debt is to focus on paying off one account at a time by making larger payments. Some people choose to pay off whichever account has the highest APR first, which saves money on interest, and is generally a good approach to take. Others opt to pay off their smallest accounts first, which can motivate you to maintain momentum as you repay your debt. Keep in mind that you’ll still have to pay at least the minimum amount due on each account to avoid delinquencies. When a credit card or loan is paid off completely, focus on tackling the next one as you move towards becoming debt free.

6. Consolidate your debt

Debt consolidation can be an excellent solution for reducing your debt for qualified individuals. Consolidating your debt works by getting a low-interest credit card or a fixed-rate personal loan where you place what you owe into one account. You can then either transfer your balances to the credit card or pay off all your debts with the lump sum from the consolidated loan. Going this route can be a great option for those with good credit because you’ll not only get a better interest rate, but you’ll only have to manage one monthly payment.

7. Work with a financial advisor

It may be time to start working with a financial advisor if your personal finances are disorganized, you’re stressed when making decisions about money, or you’re ready to embark on better navigating your financial future. These professionals are a great resource when it comes to getting a handle on debt. They provide a variety of services, often including how to map out your cash flow to identify existing problem areas.

Reduce your credit card debt and start building a better financial future

With the right strategies and motivation, reducing your debt is definitely possible –– and eventually, you can be completely debt-free!

CCCU offers low-interest Visa credit cards with free balance transfers and fixed-rate personal loans as well as a convenient online bill pay system to keep you on track. To start taking control of your finances, apply today or stop by one of our credit union branches to begin building a better financial future.

We proudly serve members who live, work, worship, own a business, or attend school in Multnomah, Clark, Washington, Hood River, Clackamas, Yamhill, Columbia, and Skamania counties, or are a relative of a current member.

We have three physical branches in Portland and one in Hood River, convenient mobile banking, plus access to 5,600+ CO-OP Shared Branches and over 30,000 surcharge-free CO-OP ATMs nationwide!

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