Tips to Manage and Reduce Your Debt
Debt can cause issues when you apply for a mortgage loan. When you have a credit card and carry debt, your payments generally go towards the finance charge first (also known as the interest) and only a small portion is applied to the actual balance.
By only paying the minimum amount due, your debt grows, which can be especially problematic when you’re trying to qualify for a mortgage or reach other financial goals.
Five Tips for Managing and Reducing Debt
1. Always pay your bills on time
2. Pay extra on installment loans
3. Pay down credit cards with the Power Payment Method
4. Ask creditors for a lower interest rate
5. Seek help from a Certified Housing Counselor
Using the Power Payment Method
This method is an effective tactic to make progress on reducing your debt. For each monthly debt you have to pay – like credit cards or loans – add more to the principal amount owed. Even as little as $20 or $50 can help you pay off your balance faster.
While making a commitment to this process takes discipline and time, your future self will thank you!
GOOD TO KNOW
PowerPay.org is a site that that provides free tools and resources to help you evaluate and pay down your debt.
Learn more by signing up for our free homebuyer class!