Get Started on Your Debt Repayment Plan with These Simple Steps

It is easier than ever to get a credit card or a loan, and while in some ways this is beneficial, it also makes it easy to get into debt. As time goes on, paying down your debt may become one of your top financial goals. By including a few simple steps in your debt payment plan, you can pay down your debt and increase your disposable income.

Prevent Debt from Increasing

One of the first steps as part of your debt payment plan should be to eliminate the accrual of new debt. While having one credit card is okay, if you have more than that, consider cutting up the extras. Convenience cards such as department store cards and gas cards should also be removed. Use your card for only emergency items that you are sure you will be able to pay off when you receive your next bill. Live on a cash budget and begin to keep a diary of every expenditure that you make to get a better idea of where your money is going.

Negotiate Lower Interest Rates

One way to speed up the progress of your debt payment plan is to reduce your interest rates. Some people are battling interest rates that exceed 20%, and while they may be making their minimum monthly payments, they are simply paying interest rather than reducing their principal balance. Therefore, it is essential to call creditors to negotiate interest rates. If the representative that you speak to states that they cannot help you, request to be transferred to speak to a supervisor until you are able to connect with someone that has the authority to give you an interest rate reduction.

Examine Your Housing Debt

In many cases, your housing expenses may be making up a large portion of your debt. To take steps to get out of debt, consider meeting with a certified financial planner to review your options and current situation. If refinancing is available in order to obtain a fixed-rate mortgage, or a lower interest rate, consider making the switch. Additionally, if you are in danger of facing foreclosure, research what alternatives are available to you. Although you may be tempted to simply move on, this can be detrimental to your credit and can make it extremely difficult to get a mortgage in the future.

Check Your Credit Score

To better manage your credit and your debt, it is important to check your credit score often. Your score will represent your reliability when it comes to repaying borrowed money. A high score can help you to qualify for a low-interest credit card, and this can be helpful in ensuring that you don’t accumulate more debt in the future. If your credit score is less than desirable, consider looking for tips to clean up your credit.

Set a Target

Setting a monthly target for the amount of money you will need each month to become financially stable is important in keeping your finances organized. However, reaching this target may require you to cut expenses or to find additional revenue sources, such as getting a second or part-time job. However, it is important to avoid tapping into your retirement savings, and you should also continue funding your retirement if you are able.

Having debt or taking out a loan is becoming more socially acceptable every day, but there will likely come a time when you are ready to pay off your debt. Paying off your debt can help to provide you with more financial freedom. While this is often easier said than done, by including a few steps into your debt payment plan, you can increase your disposable income.

Joy Mali is an active blogger who is fond of writing articles on Bad Credit Loans and advising people to get mortgage even with bad credit. Follow her on Twitter to know more on how to get started on your debt repayment plan with these simple steps.