© Robert Scoble (Flickr) Credit card of future
© Robert Scoble (Flickr)
How to get rid of debt with your savings
Debt on your charge card accrues a far higher rate of interest than your personal savings. If you have money in your bank account, it’s prudent to use this to pay debt off. You’ll be a lot better of in real terms, and your credit score will be given a welcome boost. If your money is in a 90-day notice account, be sure to provide your bank with sufficient notice so you don’t have to pay a penalty.
Reduce outgoings as part of a get out of debt plan
If your expenditure exceeds your income, it’s advisable to list all of your expenses in a spreadsheet. This enables you to scrutinize your outgoings and identify areas where you can save money. For example, switching energy supplier, insurance company, buying less expensive groceries or getting a remortgage can all save you money. You’ll then be able to use the money you’ve saved to get rid of debt in a fraction of the time. If you aren’t able to reduce the amount you spend, consider working some overtime or getting a part-time job to increase your household income.
Improve affordability with debt consolidation care
If you owe money on several different cards, the best way to get out of debt could be consolidation. Consolidating debt with an unsecured or secured loan enables you to clear all of your credit obligations and make a single, affordable repayment to one creditor. Unlike revolving debt, you’ll be given a specific date in the future when you’ll be free from debt. Avoid making future purchases on your card, especially if you can’t afford to repay at the end of the month. This enables you to remain free from debt.
Eliminating your debt with a debt relief program
If you have serious debt problems or a very bad credit history, free debt settlement could provide the perfect get out of debt plan. This involves a negotiation process with creditors to eliminate up to half of your unsecured credit. You’ll then gradually repay the balance over a period of up to 3 years. Settling debt is regarded as the main alternative to bankruptcy but, unless you’re technically insolvent, the debt that you’ve eliminated may be taxable by the Internal Revenue Service (IRS).