Debt is a scary concept. Yet it is something that millions of Americans have taken on in order to live their lives, get an education, and do the things they love. But debt doesn’t have to be so scary! You can take on debt in smart ways, or create a strategy to pay it down.

Use debt on the right things

Sometimes taking out a loan is actually just an investment for the future. This is especially true for taking out a college loan! College is often a worthy investment of your money. However, charging an expensive vacation to a credit card is probably not the best choice. Sure, a vacation is fun, but your debt might be making you wish you hadn’t spent all that money you didn’t have!

Match your behavior with your borrowing options

If you always pay down your credit card bill, then the interest rate should be of no concern to you. Just ignore the interest rates on cards, and look for benefits that you will actually use. On the other hand, if you don’t expect to pay down your monthly bill, then you should seek out a credit card with a low interest rate. The same can be applied to a mortgage. If you plan to sell your house soon, you may want an adjustable-rate mortgage with a low interest rate. But if you want to stay in your home for a long period of time or can’t afford to see your rate increase, a long-term fixed-rate mortgage may be a better fit for your needs.

Prioritize paying down debt

The longer you take to pay down your debt, the more you will owe in the long run. Incurring interest over time will only put you in more debt. It can be incredibly difficult to make payments on your debts, but you should at least always try to pay more than your minimum. Paying only your credit card minimum monthly payments can result in you paying many times more than your original payment! As much as it hurts, you may have to enforce some discipline. Don’t buy new clothes unless you need them. Don’t splurge on dessert every night. Don’t take an extravagant vacation. You’ll have much less stress about your finances if you’re able to decrease your debt every month, rather than increase it.

Consolidate High-Interest Debt

Debt consolidation lets you combine your debts into a single payment. Your loan amount stays the same, but you can save money on interest payments by consolidating your debt into a lower-interest loan. If you’re looking to reduce debt, a low rate will help you immensely. At Oregonians Credit Union, we have personal loan options that can help you, as well as HELOC loans and mortgage loans, if you are seeking out a lower rate.

Ditch your credit cards

If you’re really having a hard time with keeping yourself debt-free, you may need to go to extreme measures and pause your use of credit cards. If you’re only working with cash, you won’t be able to overcharge yourself or buy something that you can’t afford.

Seek professional help

If you just can’t get control of your debt, there are plenty of options. For one thing, you can work with your financial institution. At Oregonians Credit Union, you can make an appointment with one of our certified financial counselors to write up a financial strategy for becoming debt-free. Sure, we make money off of interest, but we still don’t want to see you in debt! As a credit union, the strength and wellbeing of our community and every member of it, is of the utmost importance. Beyond your financial institution, there are other organizations, such as the Consumer Credit Counseling Service, that can help you create a plan to pay off your debt. This is a free service, so is perfect if you’re already behind. Also, be careful about companies that claim to fix your credit or help you with debts, for a fee. If it sounds too good to be true, then it probably is.

We also have a helpful video on debt repayment! Check out the dos and don’ts of debt repayment to learn more.