Although credit cards help us make purchases we can’t afford at the time and provide many benefits; they can also be dangerous.
If they are not used wisely, and the installments are not paid on time, we can get into a situation where we accumulate a large debt. In these cases, the best thing to do is not to panic and instead seek guidance to pay off that debt as soon as possible.
Create a list of all your debts
Before making any decisions regarding how to cover your debts, it is best first to get organized. List all the debts you have, along with the interest rates of each one.
This way, you will be able to know the minimum payments that you will have to make towards each one to pay off the debts in the shortest amount of time possible.
Try to pay one of the debts in full.
One of the options you have is to try to pay off your debts one at a time. You can start by paying off the one with the lowest interest rate to avoid high amounts of interest. Simultaneously, you can make small payments on other debts.
This can be accomplished through the snowball or the highest interest rate method. The former is based on starting by paying off the smallest debt, while the latter seeks to cover the debt with the highest interest rate first fully.
Try to merge your debts into a single one.
Having debts on different cards can be difficult when depositing monthly amounts on each one, and they usually have different interest rates.
To avoid large differences between one interest rate and another, the best thing to do is to look for a loan with a low-interest rate, which you will use to pay each of your debts.
This way, you will only have one outstanding debt left, and it will be easier for you to cover it. Plus, you will only have to make one payment a month.
Begin using balance transfer credit cards
Balance transfer cards can help you save money, as some offer a 0% interest rate for 18 to 21 months. Because of this, it is best to try to cover your debts before this period expires.
Define your budget and a strategy
Another important aspect to remember when it comes to paying off a $30,000 debt is your budget. This way, you will know how much you can pay monthly and define the best plan to cover the amounts.
This can be known by calculating your finances concerning what you earn and spend. Also, consider the variable expenses to avoid being short of money in one month and unable to cover the amounts.
Use automatic payment settings.
To avoid forgetting your debt payments, the best thing to do is to set up the automatic payment option.
This way, you will also avoid lowering your credit score due to late payments and increasing interest amounts. Also, keep in mind that the higher your debt, the higher the interest you will owe.
Set payment goals and a schedule for repayment
Now that you know how much you can afford to pay each month, you can begin to determine your payment goals. Don’t set unrealistic goals, which could ultimately discourage you from making payments. Also, don’t make a plan that involves paying off your debt in 10+ years.
It is best to set up a 12-month plan that will allow you to pay off most of your debt. After that, draw up a new one and do this until you can pay it in full.