5 Tips to Get Out of Debt in 2020

5 Tips to Get Out of Debt in 2020

Coming into the New Year, getting out of debt should be at the top of your financial plan. It is time to get out of the cycle of continuing year after year with debt – this gives you a negative net worth and limits your opportunities. Follow the tips below to tackle your debt this 2020 and start growing your wealth.

1. Come up with a debt payment plan.

The war on debt starts with strategizing. How are you going to pay off all your debt? The more specific you are with the answer, the faster you will get out of debt. A good debt payment plan should tell you the order that you should pay off your debts and track your progress. Keep your focus and avoid going further into debt.

2. Keep your debt to income ratio lower than 30%.

There are many benefits to lowering your debt to income ratio. It makes a difference in the type of home loan you qualify for and it sheds light on your current financial situation. If it is more than 30%, it is an indication that you have overextended yourself credit-wise. Work hard to lower it as soon as possible.

3. Settle any old debts.

It can be tricky, but if you use the right approach, you can pay off old debts. Contact each creditor, one company at a time, and work out a deal with them. It takes time but you will be rewarded with an improved credit report. Save up for each debt, plus tax on any amount that is forgiven. Make 2020 the year you let go of your old debts!

4. Stop using your credit card.

Do not create new debt as you solve your current debt problem. Stop using your credit cards and switch to cash until you pay everything off. It can be hard but there are always ways to stop using credit cards each month.

5. Consider a balance transfer.

Shop around and look for lower interest rates or take advantage of zero percent introductory rates. This can help you get out of debt faster this year. Only go for this option if you have already stopped using your credit cards. Doing this can help speed up the process of paying off your debts.

Ian Schindler