If you have multiple sources of debt from credit cards to short term loans, its important to try to pay these off as soon as you can.
💶 List all your debt including interest rate
💶 Pay off the highest rate debt first – this is usually credit card debt. Don’t forget that if you don’t pay it off each month, the interest is added on and the next month you are also paying interest on the previous months interest. This is called compounding. If you are not good at paying off your CC debt, then cut it up. Credit cards are good for your credit rating if you pay them off on time and so useful if applying for a mortgage. BUT not paying it off on time equals a negative scoring and is detrimental to your credit rating and your own bank account
💶 Balance transfers – if you have credit card debt which you have not been able to pay off, consider transferring that to a new card with a 0% introductory transfer rate but this only works if you pay off the new CC within the introductory time period. OR take out a lower rated short term loan to pay off the higher rated CC – then cut up your CC
💶 Think of ways to pay off the debt. Firstly look at your expenses and see if there is anything you can save on – cooking at home is cheaper than take aways for example. The work you did on analysing your expenses will help you here. Sell items you no longer need. Do you have an additional skill you can use as a side-job? Could you get an additional part time job? Or if you are at home, could you child mind? Ask for a raise at work. Get pay as you go mobile. Rent a room.
Then pay off the debt with the extra savings/income
💶 Get proactive – every EUR/GBP paid off your debt is one EUR less debt
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