According to CNBC, out of the 81 percent of millennials who owe some form of debt, 20 percent believe they will die still indebted. The average millennial carries $36,000 in personal, non-mortgage debt. Many others in this country are also deeply in debt and feel they will never be free.
Derby Advisors, a firm that specializes in helping consumers who are deeply in debt, has some solutions to help people pay off their debts.
Create a Budget
The place to begin is to know what debts you have at what interest rates as well as to write down all of your expenses, both monthly and those that come up less frequently.
Pare Down Unnecessary Expenses
If you have heavy debt and are paying for Starbucks every day as well as expensive cable television and streaming services, it is time to prioritize what is really important. See how much money you can save each month that can go towards your debt. The sooner you get your debt paid off, the sooner you can stop paying all of that interest.
Get Help With Your Student Loan Debt
If you owe student loans to a private provider, you will have to look into other options to get any help with your payments and interest. Most people, though, have federal student loans.
Motley Fool suggests you go on the website of your servicer to find out what types of options you might have to help you with your federal student loan debt. Some people are able to apply for income-based repayment plans. Others are able to stop paying on their student loans for a time when they are going through a financial crisis. Others are able to have their student loans totally forgiven.
Pay Down the Highest Interest Debt First
Called the “avalanche method,” the idea is to pay off the debt with the highest interest first while making the minimum payment on all of the other debt. This will allow you to free yourself of more and more of the interest charges. Each debt paid off frees up more money to pay off the rest.
Consider a Balance Transfer Card
If you can pay off all of your debt, or at least your higher-interest debt within 12 to 18 months, Motley Fool suggests you consider applying for a zero-interest, balance transfer credit card. During the zero-interest period, you will be able to make greater payments, since you are not struggling under the high interest that most credit cards carry.
Consider a Debt Consolidation Loan
If you can’t pay off the debt in 12 to 18 months, consider a personal, debt consolidation loan. They carry lower interest and have a fixed pay-off date. Because your interest rate will not be as high, you will have more money available to do other things that are needful, like creating a rainy-day fund and saving for retirement. Best of all, you will not be saddled with debt for the rest of your life!
Whether you use a balance transfer credit card or a debt consolidation loan, put the other credit cards aside. If you use them and begin to accumulate a balance, you will dig your hole deeper with high-interest credit card debt, rather than dig out.
Derby Advisors wants you to know that, although it takes some planning and discipline to get out of debt, you do not have to die in debt and keep paying high interest to creditors. Call us for solutions. We are here to help