You can’t pay down debt effectively when you’re continuing to take on more. Cutting access to revolving accounts like home equity lines of credit, personal lines of credit and credit cards can help put a stop to mounting debt. Many lenders and credit card companies will be willing to close your line while you’re still making payments so you won’t be tempted to use your revolving accounts.
Trying to pay off all your debt at once can feel overwhelming. Instead, focus on tackling one debt at a time. Make a list of everything you owe, ranking them from the highest to the lowest rates of interest. Start at the top and pay extra where you can. Even making slightly more than the minimum payment each month can make a big difference over time.
If you have multiple sources of high-interest debt, consolidation may lower your monthly payments and simplify things by letting you make just one monthly payment.
There are two main kinds of consolidation loans: secured and unsecured. A secured loan is backed by some type of collateral. It’s often a home, but some lenders will also use certificates of deposit or retirement accounts as collateral for loans.
Unsecured loans require no collateral, but the rates are higher. Plus, lending criteria are stricter, so you’ll typically need a higher income and credit score to qualify.
Living within your means is vital to becoming debt-free, and having a monthly budget can give you more control over your finances. With a budget, you can plan how you'll spend your monthly income. There are categories for life essentials and extras such as travel and entertainment. You can also add extra debt payments to your budget to further your payoff efforts. Check out Consumer.gov’s Budget Planner Worksheet to get started.
Bringing in extra money each month can help you pay down debt more quickly. Getting a part-time job is one option, but there are other ways to supplement your income as well.
If you drive and your car is in good condition, you can sign up to be a driver for a ride sharing or delivery app. Get paid for taking surveys on a site like Survey Junkie or Swagbucks, or gather unused items in your home and advertise them for sale locally on social media or through platforms like eBay and Mercari.
Once you’ve compiled your complete list of debt, start calling the customer service lines for each creditor. Explain your situation and see what they can offer you. Some ways your creditors may be able to help you include:
Creditors normally won’t offer these types of services and concessions unless you ask, so reach out to see what might be available.
Some assets may be able to help you pay down debt, such as:
A number of state and federal programs are available for seniors who are struggling financially. The Area Agency on Aging for Maricopa County has counselors who can help you determine whether you qualify for them. You can contact the agency online or by phone at (602) 264-2255.
If much of your home is unused square footage, downsizing could be a way to get a handle on your debt. Moving to an independent living community like LifeStream at Sun City in Sun City, Arizona, could lead to savings on utilities, maintenance and home repairs, freeing up money in your monthly budget and allowing you to pay down debt. Contact us today to learn more about our floor plans, services and amenities and to schedule a tour.