Ending our blog series How to Pay Down Debt: 6 Tips, below is some more helpful advice that can facilitate the process of paying down debt.
How to Pay Down Debt: More Helpful Advice
Tip 5 – Avoid running up new debt while you pay down your current debt.
Although this tip to pay down debt may seem obvious, the journey to get out of substantial debt can be long, and new lines of credit can be enticing, especially when these credit lines offer no-interest periods or when you may need to do some extra spending (such as around the holidays). However, resisting such temptations is crucial if you really want to pay down debt. Just some of the reasons for this include that new debt will typically:
- Increase the amount of your overall debt obligations
- Increase the number of bills you are juggling month to month (This can end up increasing the likelihood of missing a payment, particularly if you have a lot of monthly debt payments).
So, try to keep these things in mind if you are tempted to open up new lines of credit as you are trying to pay down debt:
- Rely on cash more than your credit cards for your daily purchases.
- Save up for things you want to buy instead of charging them.
- Consider whether you can sell anything to generate the money you need to make a larger new purchase.
Tip 6 – Don’t forget about investing in your savings.
This is another aspect of paying down debt that people may not readily think about, but it is, nonetheless, important. As you pay down debt, think about what you can safely, regularly put away in your savings account and commit to doing this. Here are a few more tips that can help you get in the habit of saving money:
- Think of your monthly savings investment as just another bill.
- Consider having a set amount automatically transferred from your checking account to your savings account each month by your banking institution.
The reason that building your savings is such a crucial part of an effort to pay down debt is that a savings account can provide you with a financial buffer, which can:
- Help you cover sudden, unexpected costs when they arise (like medical bills or vehicle repair expenses)
- Prevent you from having to run up more debt when these costs arise, as you can use your savings instead of charging the expense(s).
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