Paying Off Debt Can Provide the Best Returns

If you are looking for the best returns for your money, then consider paying off you high interest debt. Since savings accounts, money market accounts and certificates of deposit are currently offering low interest rates, you are wiser to pay off debt than to sock your money in to low rate accounts.

Advantages of Paying of High interest Debt

Paying off debt with a high interest rate will immediately offer you a high rate of return. For example, if you are currently receiving 3 percent on your saving account, but you have a credit card with a 15 percent interest rate and a $1,000 balance, then by paying off the balance instead of saving, you will earn 12 percent on that money. This would equal $120 savings.

Paying off Debt

There are many ways of paying off your debt. You will want to avoid any ways that will affect your credit unless you are in a dire situation. Bankruptcy and debt settlement both show as a negative on your credit.

Earn Extra Money

You can  earn extra money to pay off a debt by getting a part-time job or working overtime. Seasonal jobs are plentiful and you could work temporarily to quickly pay off your debts. Be sure to contribute all of earnings to your debt repayment.

Sell Unwanted Items

A quick and easy way to make some extra cash is to sell items you no longer want or need. You could host a yard sale or sell items on line. There are a number of on line auctions sites and marketplaces where you can sell your items. The cash you make should be applied to your debt balances.

Cutting Back

A way to pay off debt without having to earn any money would be to save money on everyday expenses. This can be a great way to have extra cash for debt and to stop overspending on items you really don't need. Some extras that could be painlessly cut out of your budget include cable, Internet, cell phone, gym membership and eating out. If you have a daily habit like coffee, eating out for lunch at work or smoking, find a way to cut back or find an alternative like brewing your own coffee to take with you. A more aggressive way of finding extra cash would be to refinance large purchases like your car or home. If you can get a better rate then this may help you in the short term with freeing extra cash every month, and long term by reducing how much you pay over the life of the loan. If you are a two car family, consider selling one car and paying off debt with the proceeds. You could then take the bus, car pool or share the other vehicle.

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