If your debt load is keeping you from achieving your life goals, it can feel overwhelming at worst and discouraging at best. Maybe it’s your student loans that are weighing you down, or perhaps you’ve racked up a lot of credit card debt due to an illness, unemployment or simple overspending.
Whatever your debt situation, there’s a solution that can help you shrink your debt and feel more in control of your financial life. Of course, where you are in life can affect your approach to taking control of your debt. If you’re in your 20s, your efforts to pay off debt – and which debt you focus on paying off first – will likely be different than the approach you would take in your 40s or even 60s. Regardless of where you are in life, though, you may be amazed that the solution to many debt problems is as simple as making smaller, more frequent, automatic payments made toward your debts. Not only will you begin to see your balances go down, you’ll also end up paying less in interest charges.
Let’s take a look at several debt scenarios you may be faced with in the various stages of life and how the Pay Down My Debt system can help you make on-time payments, reduce your balances and begin making strides toward your financial goals.
Would you like to buy a home, but just can’t figure out how to set aside enough money for a downpayment because of the bills you’re already paying? If some of those bills include student loans or credit card debt, a service like Pay Down My Debt can help you get rid of them faster, freeing up more of your monthly income to set aside for buying your first house.
How? By automating your payments and making them more frequently, you’re able to pay off your debt faster by applying more of your payments toward your principal balance. It shaves off not just the amount of time it takes to pay off your debt, but also decreases the amount of interest you end up paying.
You can start your savings plan by reducing your spending a couple of ways:
Pay It Off Faster…
Let’s say you have a 30-year, fixed mortgage of $325,000 with a 4% interest rate. If you were to automate your mortgage payments using Pay Down My Debt, you’d be able to save more than $36,000 in interest and pay off your loan 51 months earlier. That’s because Pay Down My Debt allows you to make an additional mortgage payment each year and barely even feel it.
Get Rid of PMI Sooner…
But that’s not the only way Pay Down My Debt’s method can help with your mortgage payments. If you’re paying Private Mortgage Insurance, or PMI, on top of your mortgage payments each month, you may be wondering how you can get rid of it. After all, mortgage insurance does nothing for you, the homeowner. It protects the lender in case you don’t make your payments. That’s why eliminating those payments as soon as possible should be a priority for nearly all homeowners. But how?
If you have 20% equity in your home, you can ask the bank to remove the mortgage insurance. They are required by law to do so. And you can get to that 20% mark faster by paying down your mortgage debt more quickly. That’s where an automated service like Pay Down My Debt can help. The system makes the equivalent of an extra monthly payment on your mortgage loan every year. That means your balance decreases faster, the amount of interest you pay is reduced and you can drop that mortgage insurance payment sooner than you may have thought possible.
One of the most, if not the most, important things you can do in your retirement planning is to pay off your debt. The sooner the better.
If you’re nearing retirement age and still are making mortgage payments, or have credit card or student loan debt, now is the time to take control and get these debts paid down so you can put more toward your retirement savings.
A service like Pay Down My Debt can help you get your debts paid off quickly and easily by automating your payments. Here’s how it works: Pay Down My Debt debits your account weekly or biweekly for a quarter or a half of your original monthly loan payment. Over a year, the equivalent of one extra loan payment is made, but it’s done so gradually, so you feel it less that you would one lump payment. If you choose a bimonthly or monthly pattern, you pay a little more than the payment to create an extra half-payment approximately every 6 months.
This method helps you by ensuring you never make late payments because you forgot about a bill, and reduces your interest payments by applying more money to your principal balance.
Credit Card Debtors
No matter your age or how many assets you may own, if you’re carrying credit card debt from month-to-month, you’re doing yourself some serious financial harm. Not only is it costing you a lot in interest payments, it’s hurting your credit scores, which can come back to bite you when it’s time to qualify for a mortgage, mortgage refinancing or other lending scenario.
Credit card debt can seem insurmountable, especially if you’re using your cards to make ends meet every month. Before you can start to address paying off this debt, it’s wise to sit down, review your finances and put together a budget. Once you figure out where you can cut back or how you can earn more, you’ll be ready to look realistically at a plan to pay off your credit card debt once and for all. That’s where a service like Pay Down My Debt can help.
Instead of making a single monthly payment on each of your credit cards, Pay Down My Debt helps you make two monthly payments, reducing the amount of interest you’re paying and thereby paying off your debt more quickly and with less money.
[Editorial Disclosure: PayDownMyDebt.com is a service that provides people with tools to pay down their debts through automatic payments. The purpose of this article, however, is not to encourage users to purchase that service. This article is educational and journalistic in nature and aims to help people learn how to pay down their debt, whether they use our site, another, or go it alone.]