Are you struggling to come up with enough money to pay more than the minimum on your credit card debt? It can certainly seem as if there is never enough money to go around, but you might be surprised where you can find a few extra dollars to apply towards that debt and accelerate the payoff.
Borrow From, or Cash Out a Cash Value Life Insurance Policy
Do you have a small cash value life insurance policy that’s collecting dust, or even worse, costing you money each year? If so, you may want to consider borrowing from the cash value, or possibly even canceling the policy altogether.
Cash value life insurance for younger people is almost always a bad investment. In some cases, your parents may have took out a policy on you when you were young, or maybe you were sold a policy by an insurance agency. Either way, you likely only have a minimal death benefit, and a cash value that is earning very little interest. If you’re paying 10, 20, or 30 percent on your credit card debt each year, you’re probably doing more harm than good by keeping the policy. Once you get caught up on your debts, you can look into a much more affordable term life policy.
Sell Non-retirement Investments
If you have some investments in regular taxable accounts, either in terms of savings bonds, CDs, or even mutual funds or stock, it may make sense to sell some of those investments to apply towards your debt. While any gains on these investments are taxable, compare the total amount of tax you’ll pay compared to the amount you’ll save by reducing the debt.
If you invested $1,000 in a mutual fund two years ago and it is now worth $1,500, which means you have a $500 gain. But since you held the investment for over a year, it is subject to the favorable capital gains tax, which is currently 15%. That means if you cashed out the $1,500, you’d only owe $75 in taxes. That would leave you with $1,425 to apply towards your credit card debt. If your credit card has an interest rate over 15%, you’ll be saving some money and getting that debt paid off even sooner, which saves even more interest down the road.
Sell Some Personal Items
Most people have a lot of stuff that just collects dust in the garage or the basement that is no longer being used. While we always think we’ll have a need for that old guitar or nostalgic video game system, they are probably just taking up space.
Consider having a yard sale, or even placing items for sale on eBay or on Craigslist to make some extra money. While selling just one or two items for $20 won’t work miracles on your debt, selling a few dozen items for $20 will. Even generating a few extra hundred dollars will put a dent in your debt, and you’ll also be cleaning up your house or apartment at the same time.
Cancel Subscriptions
The monthly subscription is a serious drain on anyone’s budget. Each subscription itself seems small and very affordable. $5 per month here, $20 per month there, that’s no big deal. While any one subscription may not seem like much, when you have ten or more of these subscriptions each month, it can literally cost you a few hundred dollars a month. Canceling, or even just downgrading a handful of your monthly subscriptions can free up a nice chunk of change each month.
Are you paying $60 each month for an 800 minute mobile phone plan when you never go over 500 minutes? Are you receiving the weekly edition of the newspaper when you really only have time to read it on the weekends? Do you receive magazines that you don’t get much value out of, or could just browse online? These are all items you can downgrade or eliminate and free up money to apply towards debt.
Don’t Stop Here. Get Creative
These are just a few ideas, but it should give you something to think about as to where you can save money in your life. You don’t need to have a large pile of money sitting around to put a dent in your debt. Just being able to find ten ways to save $10 each month can cut your debt repayment plan by months or even a few years, and save you hundreds or thousands in interest over the long run.
So, where can you find money to pay off your credit card debt?
