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Each week, we answer money questions from around the web on the NerdWallet app. Here are three of the trending questions from the month of January.
How do I pay off my debt faster?
Paying off debt as quickly as possible starts with making a plan that works for you.
The snowball method — which involves paying off the smallest debts first and building momentum from there — is one popular option. Another is the avalanche method, which involves paying off the highest-interest debts first.
An alternative is to simply pay more than the minimum amount due every month on all of your debts. The more you pay, the quicker your debts will be paid off. You can use an online calculator to help you reach your targets.
If you’re struggling to keep up with all your debt payments, then you might consider calling your creditors to try to renegotiate your debts. You can try asking for a lower interest rate, or for fees to be waived, especially if you’re a longtime customer.
If you experience a hardship, such as an illness or job loss, some lenders offer hardship programs that allow your payments to be temporarily paused or lowered.
Those with multiple credit cards and a credit score that allows them to qualify might consider applying for a 0% balance transfer card. You can consolidate your cards, then aim to pay off the balance before the introductory rate expires.
Taking out a fixed-rate personal loan is another way to consolidate debts, since rates tend to be lower for personal loans than for credit cards. NerdWallet offers a debt consolidation calculator to help you weigh your options.
Whatever method you choose, take time to investigate how the debt built up in the first place. That way, you can try to minimize the chances of it happening again. Lowering your bills, creating a budget and finding new ways to save can help.
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How do I use sinking funds?
Sinking funds are a manageable way to prepare for big recurring expenses.
They’re dedicated savings accounts that allow you to deposit money steadily throughout the year so when the expenses hit — like vacations or holiday spending — you’re ready to cover the cost.
Without a sinking fund, it’s easy to turn to debt to cover these big expenses. Even though we know trips and major holidays happen every year, it can still be hard to cover them without advance planning.
To start a sinking fund, brainstorm the expenses you anticipate in the next 12 months. Then, consider opening a high-yield savings account dedicated to that purpose.
You could opt to automate transfers directly into the account from each paycheck or manually move money over whenever you’re able.
If you end up having more than you need in the account, it’s no problem. You can use the money for a different purpose — save it for next year or add it to your emergency fund. (A sinking fund is different from an emergency fund. The latter is for unexpected hardships such as a job loss or car repair.)
How do I easily cancel subscriptions?
Before you start to cancel subscriptions, make sure you know which ones you have.
To do that, conduct a subscription audit: Comb through statements for credit cards, debit cards and any other payment methods to check for recurring items. You might not even remember all of the streaming or digital subscriptions you opted into — especially if they turned into a paid subscription after a free trial.
It’s also worth checking your iPhone or iPad for any subscriptions purchased through your Apple account. Visit your device settings and look for “subscriptions.” You should be able to cancel with a click. You can also unsubscribe from subscriptions you no longer need by contacting the company directly.
Another option is to use the NerdWallet app’s subscription and bills feature to view and cancel subscriptions.
If you’re still trying to cancel a subscription after following the steps above, you have options:
- Try a web search of the company’s name and the phrase “how to cancel.” You might find solutions posted by other customers.
- Escalate the issue by making a social media post, tagging the company or filing a complaint with federal or state regulators such as the state attorney general’s office. The Better Business Bureau — a nonprofit that collects consumer complaints and works to help resolve them — is another option.
- As a last resort, you could also dispute the charge through your credit card issuer or file a “stop payment” order with your bank. (Issuers generally require that you first attempt to resolve the issue with the merchant directly.)
If you want to be extreme about cutting costs, you could cancel all of your subscriptions and then slowly add back the ones you miss. Once you’re finally free of the unwanted subscription, you can redirect that money toward saving, investing, paying off debt or accomplishing another financial priority.
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