If you’re looking to get a mortgage, one thing that will raise your credit score faster than anything else and help you qualify is paying off credit cards and loans. Read on to discover how to pay off debt quickly.
One of the first things you need to do is get on a budget. Make a list of all your bills and expenses to get a starting point. Just by doing that, you’ll be able to see where you could start saving. There are also some great apps like YNAB to help you get control of your cash flow. By budgeting, you’ll have more money to pay down your debts.
And speaking of budgeting, don’t forget to take a look at your grocery bill. Some careful planning and watching weekly sales can really cut costs.
Spending Less on Groceries Means More for Debt Reduction
When you take a look at your budget, you’ll see that many of your bills can stay in the same range each month. But that’s not the case with groceries. If you don’t watch out you can blow the budget quickly. Here is a great video:
She shares tips, and apps and websites to check out. It’s worth watching.
Cut Your Costs
If you haven’t been on a budget, there’s a good chance you’ve been wasting money. Go through your bank and credit card statements to find any subscriptions you’re paying for. Although they’re usually only $10 to $25 a month – it can add up. And it’s so easy to forget about them once you’ve signed up. While you’re looking at subscriptions, also make a list of other areas you could cut costs.
It’s wise to shop each year and find the least expensive:
- Cell phone service provider
- Internet service provider
- Cable company
- Car insurance
- Medical insurance
Small Steps Mean Big Wins
Taking on any project – especially a financial one can be overwhelming. That’s why it’s essential to set yourself up for success. An easy way to get off to a good start is to pay off your smaller debts first.
By focusing on a tiny debt (while paying the minimum on the others), you’ll see progress. Many of you might be familiar with this concept from Dave Ramsey. He explains it here in this video: Pay Off Debt Using the Debt Snowball.
Once you’ve paid one debt off, take that same amount of money and apply it to the next smallest debt. Not only will you be whittling down your total debt – but you’ll also have fewer bills to pay.
Jack Up Your Income
There’s no better solution to debt than making more money. Put on your thinking cap and come up with some ideas. Suppose you’re self-employed – look at offering higher-priced products and services or raising your fees if they’re too low. If you have a job – look for a better-paying one and consider getting a side job or gig.
If you like podcasts, you’ll love The Side Hustle Show. Host, Nick Loper finds entrepreneurs making money in some of the most unusual ways. Listening to these interviews might give you some good ideas of how you can make some extra cash.
Pay Down Higher Interest
If you have two cards with similar balances, pay off the one with a higher interest rate first. That will save you money in the long run, and you’ll have more to go towards the rest of your debts.
Sometimes it’s a good idea to get a debt consolidation loan (often called a personal loan) from a bank or credit union with a lower interest rate than your credit cards. If that’s possible, it might be worth doing. Anything you can do to save on interest will get you out of debt sooner.
Paying off debts will get you closer to your dream of homeownership. But don’t wait too long. You don’t have to have everything paid off. You just need a little room in your budget to be able to afford a house.
Whether this is your first home or your fifth, we’re here to help. Our low-interest home loans are some of the best in the states we serve. We service Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, Ohio, Tennessee, and Texas. Contact us today to learn more about the home loan products we offer that are right for you.