Nine Steps That Build Your Debt Repayment Snowballs
Wipe our Debt (Photo credit: Images_of_Money)
Just like you roll snowflakes together into a circle to form a winter snowball, roll your debts. Start by paying off the debt with the highest interest rate, and continue to repay the minimum amounts on all your other debts. After the first debt is repaid, apply the money you were using to repay that debt toward the next debt.
Repaying each debt motivates you to continue working hard. But big debts that take months or years to repay can be discouraging. These nine steps help you build your snowballs and repay your debts even faster.
1. Work Overtime
Asking for overtime shows that you’re a hard worker who takes initiative. It also puts extra money in your paycheck. Don’t spend that money on stuff, though. Apply it toward your debt.
If overtime’s not available, take a second job. Babysit at night, take a stocking job at a grocery store, or tutor high school kids.
2. Dilute With Water
Decrease your expenses when you add water to your household detergents, body wash and shampoo. The water won’t affect the effectiveness of your products, but it will save you money.
3. Sell Stuff Online
Someone wants what you have, so use Craigslist, eBay, Amazon, Half.com and a personal yard sale website to reap both small and large financial rewards. Books, music and DVDs are popular items, but there’s a market for almost everything. Even some big name companies will pay for items you thought worthless, such as CJ Pony Parts will buy used Ford Mustang parts.
4. Buy Used
Can you go an entire month without buying anything new? Shop at secondhand stores or online, and see how much money you can save when you buy used clothes, household items, electronics, furniture and tools. But remember that just because you can buy it used doesn’t mean you should buy it at all. Keep the big picture in mind and only purchase the necessities.
5. Ask for Money
Sounds crass but using the money from birthdays, anniversaries and Christmas will burn a whole in your debt. So next time a friend asks you what you want say MONEY. Then make sure to use that money towards your debt right away so you aren’t tempted to use elsewhere.
6. Consider Refinancing
If your debt allows, talk with a finance counselor about refinancing your loans. If you already have a small interest rate then don’t worry about it. Make sure to explore all your options for paying of the loan as well. If you work in non-profits or for the government, the Obama Debt Forgiveness Act will help you get rid of all your loans after a certain amount is paid.
7. Brown Bag Lunch
Instead of spending $8 for a hot dog and soda, spend $2. You can easily make extra dinner the night before and reheat it for lunch the next day or take affordable salads and fruits.
8. Claim It on Your Taxes
The government will refund the interest paid on your debt up to a certain amount. Make sure to file the correct paperwork so you can claim that refund. Once you have, use it to pay off more debt.
9. Unplug Electronics
Even when they’re turned off, electronics suck electricity and inflate your bill. Unplug everything until you need it. That includes your microwave, cell phone chargers, washing machine and TVs.
You can repay debt. Simply take these nine steps that increase the amount of money you can apply toward your snowballs. What other steps can you think of to take?
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Category: Budget, Family Finances, Saving Money
