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7 Proven Ways To Pay Off Credit Card Debt To Find Money to Invest for Retirement
We are excited to feature this guest post by Linda Richardson, a New Jersey-based financial content writer. It is hard to invest and save for retirement when you are buried in debt. In this article, Linda shows a few methods you can use to pay off credit card debt and free up money for investing and prepare for your financial future.
Ways to get out of credit card debt
Credit card debt is considered unsecured. As such, it has a much higher interest rate as compared to secured debt; it becomes more difficult to pay back your unsecured debt, as the debt amount keeps rising with interest payments. Credit card debt can be eliminated by various methods, including debt consolidation, debt settlement and even bankruptcy, if all other options fail.
1. Consolidate your debt
Credit card debt consolidation can be helpful, if you have multiple credit cards that are difficult to handle. Debt consolidation allows you to merge your multiple debts into a single one through several methods. Another advantage of this method is that the interest rate on your outstanding debts are lowered. As a result, it becomes easier to pay off your debts easily. You can either take out a consolidation loan to repay all your credit card or other unsecured debts or enrol in a debt consolidation program.
2. Go for debt settlement
Debt settlement is another option you can use to help you repay all your unsecured debts. With this option, you can get out of credit card debt easily. Depending on your negotiation skills, your debts can be reduced by as much as 40% to 60%. Since negotiating with creditors can be a difficult task, a debt relief company may help you enrol in a debt settlement program and negotiate on your behalf.
3. Follow the debt-snowball method
Besides debt consolidation and settlement, the snowball method is another option you can use to help you pay off your credit card debt. With this method, you need to arrange your debt from the smallest to the highest amount. You make larger payments to the smallest debt, while making the minimum payment to the other debts. Keep making large payments until the smallest debt is paid off. Once it is done, target the second one in the list and follow the same method until all debts are paid off.
4. Follow the debt avalanche method
The debt avalanche method will help you to repay high-interest rate debts faster. With this method, you arrange your debts from highest to lowest interest rates. You target the debt with the highest interest rate and make large payments towards it. You then make minimum payments to the other debts. Keep making large payments towards the high-interest rate debt until it is paid off. After that, target the second-highest interest rate debt in the list and follow the same method. This method will then enable you can get rid of your high-interest rate debts one by one.
5. Other ways to repay debts
Besides the methods listed above, there are other ways to get out of credit card debt, including the balance transfer method. With this method, you need to get a 0% interest rate credit card to transfer all the balance and repay within the promotional period. However, this can be difficult if you have a low credit score. The last option is filling for bankruptcy. If you are unable to repay all your debts, you can file bankruptcy and start afresh.
The bottom line
America is burden by debt, including credit card debt. This debt burden is preventing too many Americans from saving and investing for retirement. There are many ways to pay off credit card debt and free up money to invest. If you follow the debt pay off methods listed above, you give yourself a better shot at reaching financial peace of mind during retirement.
Please share this article. If you are interested in submitting a guest post, please click here. Here are a few other articles you may find useful: 3 simple ways to handle stock market volatility | 4 smart ways to both invest and pay down student debt | A simple portfolio to supercharge your returns | How to invest $50.