A large amount of debt can prevent you from living the life you want. You'd like to pay off those bills, but the task can sometimes seems impossible. Surprisingly, a debt-free life is closer than you think. With our tips and a bit of focus on your part, you can get rid of your debt and start building a more stable financial future.
To get rid of your debt, you need to get organized - start by making a list of what you owe. It’s easy to remember the big debts, but don’t forget smaller ones like store credit cards. Next to the debt amount, write down the interest rate you’re paying.
Rank your debts in the order you want to pay them off. In general, it’s better to focus on paying off the debt with the highest interest rate first, but if that card is $8,000 and you have a $700 bill with a lower interest rate, you’ll probably find it’s more satisfying to completely pay off that $700 bill first.
Once you have your list, you’ll continue making minimum payments on all of the debts, but apply extra money to the debt with the highest priority until it’s paid off.
Rearrange Your Debt
You can save a lot of money and pay off your debt faster if you’re able to get lower interest rates. Often, your current credit cards will offer deals on balance transfers. Sometimes, you can even get a balance transfer with a zero percent interest rate. Pay attention to those advertisements that come in the mail, and transfer your balances if you can find a better deal.
Even if you aren’t getting balance transfer offers, you can sometimes get the credit card company to lower your interest rate simply by calling and asking. It’s definitely worth a shot.
Make It Automatic
When you miss a payment, the bank will charge you a late fee and your credit score can take a hit. The best way to avoid this is by setting up automatic payments. To be sure you always have enough money in your account, schedule the payment to fall on your payday.
Make sure you’re paying more than the minimum monthly payment on at least one of your debts. Many people find it easier to pay more when the payments are automatic.
Make It A Game
Try to find ways to make paying down your debt a bit more fun. For instance, you could make a commitment to pay a slightly higher amount each month. The more you can pay, the better, but even adding an extra $10 to last month’s payment can help you reach your goals.
You might also challenge yourself to cut back on other expenses, then use the savings toward your debt. For instance, if you usually spend $100 a week on groceries, you might challenge yourself to use up all the food in your pantry rather than shop for new food one week. That’s an extra $100 you can put toward debt.
Many people also respond well to debt trackers. This is a visual representation of paying off your debts. If you owe $5,000, you might draw a chart with 50 different squares. Each time you pay $100, you colour in one of those squares. There are many ideas for this on Pinterest.
Find a Side Gig
Everyone talks about getting a side job to pay off your debt, but most side jobs don’t pay a lot of money. Instead, look for opportunities to use your current skills in a way that will bring in a bit more cash. For instance, if you’re a website designer, you’d make more money designing websites on the side than you would stocking shelves at the grocery store. You may also be able to offer consulting services, organization services, or tutor high school students in your area of specialty. These types of gigs all pay at least $20 an hour.
Cultivate a Frugal Lifestyle
It’s hard to live on a budget when your friends seem to be living a lavish life, but you don’t need to spend a lot of money to have fun. Rather than going out on a Friday night, invite friends over for pizza and beers at your house. Have everyone chip in to cover the costs. Go to the museum on days with free admission. Spend time at a nearby beach rather than going on vacation.
Don’t be afraid to tell your friends you’re trying to cut back on spending. You might even find many of them would be happy to cut back as well.
Accept Some Help
Ask your family and friends for help. If your parents offer to let you move back in, take them up on it. The money you save on rent will help you quickly pay off those debts. You could also put out some feelers for a better job. A lot of people find their next position by networking with friends, and a bump in salary will go a long way toward helping you become debt-free. Alternatively, free credit counselling may be a solution for resolving your debt faster.
Debt can feel overwhelming at times, but there’s a light at the end of the tunnel. Stay focused on reaching your goals, and you’ll be able to live the life you’ve been dreaming about.