You’ve got a lot of options in today’s economy. If you don’t have enough money to pay for your bills, you can turn to a payday loan or other forms of short-term debt financing.
Payday loans are unsecured “credit” that is not backed by collateral. The average interest rate on such loans is 300% APR (annual percentage rate).
The problem with these loans is that they require repayment within two weeks after the date when your next paycheck would arrive if you were employed full time. So if you need extra cash and aren’t sure how long it will take you to find another job, then you could be at risk for a payday loan.
If you do go ahead with one of these loans, you should know that there are plenty of ways to avoid them.
Here are 4 steps to reduce your debt.
1. Pay off your credit card balances first
This is the single most important step towards reducing your debt. You should always make this goal your top priority because once you start paying down your debt, it becomes easier to deal with any additional debt you may have later on.
To pay off your credit cards quickly, set up automatic payments each month. If you only get paid once a week, aim to use the automatic payment feature so that you can set it up to send money directly to your bank account every Friday night. This way, you won’t miss a payment during the entire month. Once you’ve paid off all of your credit cards, move onto step number 2.
2. Make a budget
Once you’ve paid off all of your credit card debts, you now need to create an accurate monthly budget. It’s very important that you include all of your expenses and income into this budget to ensure that you are living within your means.
If you are able to cut back on some of your spending, then you can put that money toward paying off your debt faster. But remember, if you want to reduce your debt, it needs to come from somewhere!
The first thing that a person can do to reduce the amount of the debt is to form the budge. Proper formation of the budget will give good results to people. The focus of people to borrow money online should be there only if it is within their budget and buying the amount is a necessity for them.
3. Set up online bill pay
One of the easiest ways to save money is to automate as many of your daily transactions as possible. For example, you can set up automatic payments to your cable company, cellphone provider, utility companies, etc. All of these providers offer services where you can set up automatic payments through their websites. Many of them also provide apps that allow you to manage your accounts without having to log on to their sites.
Make sure to sign up for online bill pay before you run out of money again, because if you wait until you need more cash, then you may not have access to an internet connection. And if that happens, you’ll have no option but to try to pay your bill using snail mail, which takes longer and requires you to keep track of multiple checks and all of their due dates.
Another benefit to setting up online bill pay is that you won’t have to worry about forgetting to make a payment. When you’re making paper copies of your checks, you can easily lose your checkbook or misplace the actual check itself. With online bill pay, you just need to log into your account and make a payment whenever you like. As long as you have an active Internet connection, you can pay your bill whenever you like.
4. Look for better deals on your utilities
There are lots of places you can find great deals on electricity, home heating oil, natural gas, water, and even phone service. If you are looking to save money when it comes to your utilities, it’s important to shop around. Don’t just assume you’ll automatically receive the best prices based on what you currently pay. You might be surprised to find that you can save a ton of money by switching to a different provider.
And if you think this might be too complicated, check out our list of 50 free utilities and utilities discounts to help you out.
These four tips should get you started on your path towards reducing your debt. Of course, the best way to tackle any debt is to first look at where you stand financially. If you don’t know where you stand right now, then you definitely need to sit down with a budget calculator to see exactly where you stand.
If you follow these steps, you’ll soon be on your way to living debt-free. Just remember that while you’re working hard to get rid of your debt, you shouldn’t let yourself forget about the importance of saving money in general. After all, the best way to reduce your debt is to become a financial expert. Take advantage of all of the tools offered by the web to learn more about personal finance and make wise decisions throughout the year. By doing so, you’ll be able to live with less stress and enjoy life more than ever before.