No two people have exactly the same financial position. Differences in age, income, and lifestyle all play a role in determining your financial health. But debt might be the greatest indicator of how you’re doing in this realm. Most people with loans have a goal of paying them off at some point. So how long does it take to become debt-free? There are a lot of variables that go into this equation.
How High Is the Interest on Your Debt?
In most cases, you’re going to have to pay interest on your loans. Your interest rate is going to play a huge factor in determining how long it’ll take you to pay down your debt. Higher rates mean that you’re going to accumulate more debt the longer it takes you to pay off the loan.
Certain kinds of debt—such as credit card balances or payday loans—can seem impossible to pay off due to their high interest rates. If you want to get serious about reducing or eliminating your debt, you need to think strategically from an interest perspective.
Try to pay off balances with the highest rates first. You can also consider transferring balances if it will grant you a lower interest rate.
Are You Paying the Minimum Each Month?
A lot of people don’t understand why you would do anything but pay the minimum on a credit card balance each month. The picture becomes a lot clearer for them when they realize their balance keeps going up—even if they’re not actively adding to it.
Credit cards come with some of the highest interest rates of any form of debt. Only paying the minimum on your balance each month will result in you having to fork over fistfuls of money that you never actually spent on anything. In fact, if you only pay the minimum on your credit card balance each month, you may never pay it off in full.
Have You Considered Debt Negotiation or Consolidation?
Some people might have debt that has reached a level that’s no longer manageable. In cases like this, it might not even be possible to pay off the debt entirely—even over extremely long periods of time. Individuals in this situation should consider looking for outside help to get their finances back on track.
Debt negotiation and consolidation services can be helpful for those who otherwise can’t pay off their loans. Freedom Debt Relief is one of the top players in this arena. They have a history of helping consumers get their finances back in order. Some people who take advantage of their services can totally eliminate their debt in as little as 24-48 months. Check out Freedom Debt Relief reviews via Consumer Affairs to see how others have benefited from enrolling in their programs.
Can You Boost Your Income?
One of the best ways to pay down your loans faster is to increase the amount of money you’re bringing in each month. While this isn’t the most glamourous option, it can certainly help people pay down their debts—especially when all that supplemental income is strictly dedicated to that task. Look for part-time jobs that pay a good hourly rate. Or consider freelancing within your industry. It also doesn’t hurt to ask for a raise if you think you deserve one.
No matter how you choose to boost your income, all that extra cash will do wonders for getting you out of debt sooner.
Can You Sell Anything to Help Pay Down Your Debt?
Are you really using all your possessions enough to justify owning them? It’s likely that you at least have a few things of value that you’re not using on a regular basis. While it’s not necessarily enjoyable, selling some of your belongings can be a great way to get you out of debt in less time. You should also look at your overall expenses to see if you have any unneeded recurring costs—such as unused gym memberships. Redirecting this money to paying down your loans can get you debt free in a much shorter time frame.
No one wants to be indebted for a long period of time. But loans can stay with you for a long time if you don’t approach them with a solid repayment plan. Consider how you can make changes to your life in order to get out of debt sooner.
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