When you spread out your bills and tally up your balances, do you feel intimidated by what you have to pay off? Getting out of a debt is a top-five goal for a lot of us, and with discipline, it can be done. In addition to creating a budget to stick to, here are five ways you can get your debts paid down faster than you imagined.
- Do not add to your debt.
This won’t apply to every individual, but those with a history of poor money management tend to tack onto their debt at the first sign of improvement. As you pay off existing balances, refrain from taking on new ones.
If your debt is still greater than a thousand dollars, it’s too soon to “turn over a new leaf”. Don’t even tell yourself this new card is “just for emergencies”. Get free and clear before you judiciously proceed with a new, lower-interest loan or credit card.
- Increase your income.
Are you making the most of your skillset? Are you getting paid enough for what you already do? If not, it’s time to check and see if you’re due for a raise. In addition to your primary job, you could also freelance on the side, or sell things you really don’t need.
The key is to reserve 100% of these proceeds for your debt. The more of it you spend on your day-to-day life, the longer you’ll have to keep up the extra work. Remember, the goal is to pay the debt off so you can enjoy life worry-free, not work doubly hard for the foreseeable future.
- Pay off smaller debts first.
Maybe the sheer number of statements you’re getting is what’s really dragging your attitude toward money down. To fix this, pay the minimums on all of your larger debts, and throw the remainder of your debt-paying budget at the smallest balance.
This way, when you get to the big debt, you’ll already be feeling good about what you’ve eradicated. Now you’ll have the room to make larger-than-average payments on those bigger balances.
Ask those with student loans – nothing makes us feel as financially helpless as making payments that essentially just count toward interest. With credit cards, insurance, and even medical debt, asking for a lower interest rate really isn’t as bold as you think it is.
In fact, if you have a history of paying at least something on time every month, you might be surprised by the lender’s agreement to do so.
If paying down your debt would put you in a position where you couldn’t afford essentials like rent and food, think about consolidating debt. Be very careful when choosing a consolidation company, and you could end up debt-free in short order.
It isn’t always an option for those who want to maintain a high credit score, but it is good for those who have trouble keeping track of their finances.
No one wants debt. Yet the average household is carrying thousands in the form of credit cards, loans, and more. Make your goal to be debt-free a top priority, negotiate lower rates, pay off your smallest balances first, and increase your income for fast, reliable debt relief.