- Personal Finance
Make Extra Money to Pay off Your Credit Card Debt Faster
Chances are you are one of the millions of people knee deep in debt, wondering if you will ever be debt free. Bankruptcy carries a long term stigma. Debt settlement may be an option, but you should know that cancelled debt can be taxable income. If you can’t pay those taxes, you will be in debt to the government, which may not be as accommodating as some of your other creditors. Debt consolidation is usually accomplished through a home equity loan, but that means putting your home at risk if you can’t make the payments. The options are not very encouraging. But what if you could make extra money to start paying off your debt and reduce your monthly payments? In the world of finance and interest rates, a little extra can go a long way.
Common knowledge tells us that we need to make additional payments beyond the minimums due in order to get ahead on our debt. The problem most people face is that there is no extra. Countless people have fallen into the credit trap and are helpless as they watch interest compound and balances rise. Instead of doing something about it, they continue to make the minimums. If your goal is to get out of debt, and take control of your money, and not just make payments to ward off judgments and keep the creditors at bay, you need a plan.
The amount of debt you owe as well as how much extra money you can earn to pay off your debt will determine how long it will take to achieve the ultimate goal of being completely debt free. Using a debt pay off calculator, many of which are available free online, you can easily determine how much extra money you will need to pay off credit cards or other unsecured debt in a specific period of time.
For example, a credit card balance of $14,000 with the unfortunate interest rate of 29% (which is a default rate charged on accounts with as little as one late payment) and a minimum monthly payment of $485 would take 27 years and 3 months to pay off, with $27,879.11 being paid in interest alone. At this point, you are probably thinking the only way to become debt free is to die. Not so. By paying only an additional $15 per month, or a fixed payment of $500 per month, that debt could be entirely paid off in 3 years and 10 months. Increase the monthly payment to $550, and the debt is paid off 7 months earlier.
Using a credit card debt calculator is an easy way to come up with a payoff plan you can live with, and tell you how much extra money you need to make to get out of debt in your chosen time frame. The next step is to make that extra money and dedicate to reducing your debt.
There are a number of ways to come up with an extra $100 or more every month. First, and most obvious, is to make adjustments to your lifestyle. You can give up a few extras, buy less expensive products, go out less often, use coupons and start growing your own food. These are proven methods for reducing expenses. Adding to your income, actually making money will get you from Point A to Point B quicker.
Doing everything you can to pay down your credit card debt as fast as possible works to your advantage. A second job is certainly an option. And then there is the Internet, a virtual wonderland of money making opportunities where anyone who wants to make money can. The question is, will you? Is getting out of debt and being free of the worry and burden important enough to you to work for it? It is not impossible to get out of debt. You may not see huge declines in your balances to begin with, but over a period of a year, you can pay off a significant portion of your debt.
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