You budget and scrimp to make your debt payments each month (yay you!)
But when you look at the principal still due on each of your loans, does it feel like you’re standing still?
That’s discouraging! We get it!
Fortunately, the Summit team has some great ideas for making that mountain of debt shrink to a more manageable size.
First, make a list of all your debts.
Write down who you owe and how much, the interest rate and the amount of time it will take to pay off each loan if you keep following your current payment plan.
Next, consider a couple things.
1. Do you have the best possible interest rate on every loan? For instance, do you have a credit card with a high rate? Have you checked out other options with a lower rate?
Maybe you picked a credit card because it offered great rewards. But if you’re not paying off the balance due every month, you’d be much better off switching to a card with a lower rate. Check out Summit’s credit card options to see if there’s one that meets your needs and offers you a better deal. (And if you’re a Red SHOES member, look at pages 46-47 in your Red SHOES book for an example of how a lower interest rate can mean big savings).
And, how about your mortgage? If you got it fairly recently, you might not be able to do much better in the rate department, but it never hurts to find out—and even a small rate difference could save you thousands in interest!
At Summit, we’d be happy to sit down, review your loans and point you in the right direction.
2. Have you looked into consolidating your debt? This means bundling up your debts and refinancing them at a more competitive rate.
Sometimes a credit card provider might give you an offer to turn all your credit card debt over to them to save on interest. That can be a good choice in some instances—but not always. For instance, the credit card is probably enticing you with a low interest rate to start with, but this likely bumps up after a certain amount of time. If you can’t afford to get rid of your debt in this window, you could end up paying an even higher interest rate and making your mountain of debt even bigger. Plus, there might be a fee to make the transfer. Again, check out your Summit credit card options: We’ll steer you to a card that makes sense for you, and we don’t charge a fee for credit card transfers.
An even better choice might be to consolidate your debt using the equity in your home.
3. Should you leverage your car loan? Your existing car loan can be another way to save money on interest. Consider rolling high-interest credit card or other debt into your lower-interest car loan: you might be able to extend the terms of the loan, borrow the money you need to pay off the more expensive debt and still have the same monthly payment.
No matter which option you investigate, there’s one critical thing to remember: Summit Credit Union is on your side! We want to see you succeed and we’re here to help you reach the “summit” of your debt (every pun intended!).
Not a Red SHOES member? Gain control and be confident in your financial decisions with this exclusive financial wellness program. Learn more and register today.
