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10 ways to
pay off debt... Page 2
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5. Transfer Debt To A Low-Interest Card
If your low-interest card hasn't been maxed out, and your creditor allows, you should
consider transferring all your high-interest debt to it. This strategy won't eliminate
your debt, but it can lower your costs. Call the bank that issues your card and ask for a
lower rate. Tell them another company has offered you a better rate with no annual fee.
You will be surprised at what your lender will do to keep your business.
Another alternative is to take advantage of the introductory rates many card issuers offer
to get you to switch credit cards. We've all seen the rates that start out at 5.9%. This
temporary solution may save you a few bucks in interest and allow you to pay down more
principal each month.
A word of caution: Read the fine print before you act. Many of these "teaser
rates" last only a few months. After that, the rate may rise dramatically, even
exceeding the rate you're currently paying. The terms of your card may also stipulate that
the low rate applies only to new purchases, not existing balances and that it is valid
only to account balances kept for at least a 12-month period. Be careful how you execute
this strategy.
6. Borrow From Family Or Friends.
Borrowing from your family or friends is worth considering. After all, they know you,
trust you, and probably understand your financial situation better than anyone else. They
might even cut you a favorable interest rate or repayment plan. Make sure you put the
agreement in writing and that all parties involved understand the terms and conditions of
the loan. Keep this part of the relationship professional.
Some alternatives to help solidify the deal:
1) Call the loan an early inheritance and make sure your siblings fully understand
your financial situation so they don't get upset.
2) Split the difference. Pay them an interest rate that is less than what you're currently
paying but considerably higher than what they would earn in a liquid account.
7. Cut Expenses.
Another effective way to find money and pay debts is to reduce your expenses. Is it
possible that what you consider a necessity are really optional? There are a variety of
things you can do in your daily life that can produce big savings. Here are some simple
suggestions:
- Pack your own lunch for
work.
- Buy generic brands.
- Buy secondhand clothing or
furniture.
- Cancel your health club
membership.
- Clip coupons.
- Cancel your cable service.
- Cancel your extra phone
services such as Caller-ID or Call-Waiting.
- Read books, magazines, and
newspapers at the library instead of buying them.
- Carpool to and from work or
school.
- Skip the latte or candy bar.
- Rent movies instead of going
to the theater and buying those expensive goodies.
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