How to Get Out Of Debt Fast
If you have a huge amount of debt, then you must have known that familiar
feeling of being tied. Having debt is very limiting. You are never going to
live your life to the fullest if you carry a huge amount of debt.
The good part is that you are not alone. It was predicted that an average
American carries $7,000 in credit card and more than $25,000 in non-mortgage
debt. Not to mention that you will have the student loans that you will have to
pay.
That is a huge amount of debt. The good news is, you don’t need to
worry about dealing with debt collector, even with a flick of your finger. All you need is consistency.
Below are the ways you can get out of your debt fast:
- 1. Stop using a credit card
This is perhaps the first thing that you should do
once you realize that you have had an overwhelmingly huge amount of debt. You
should stop using your credit card until you have paid off all of your debt.
We know that it is very to use your credit card
for any purchase transaction. However, because of that reason as well that
perhaps instead of being able to pay off your loans, you are only adding more
loans to your debit card.
If for some reason you still need to use your
credit card, then you have to be very strict with yourself. Ensure that all the
purchases that you made with that credit card are budgeted. At the end of the
month, this means that you will be able to pay it off.
Another alternative to that is you can choose the
credit card that gives you the best deal. This means more advantages that you
can take at a later date or even lower credit rate. You can use that card and
freeze all of the others.
However, if you think that you do not have that
amount of will power – it is very difficult, then you can always freeze your
card.
- 2. Pay more than the minimum amount
We know that you are squeezing your budget very
tight. However, you need to pay off more than your limited amount. This way,
you will actually be able to see the progress of your paying it off.
By paying more than your minimum, you are also
ensuring that you are going to be charged will less amount of interest each
month.
- 3. Budget
If you have never maintained a budget in your
life, then this is a good way to start. The reason why you should start
budgeting is that you are going to be able to gain more control over your
expenses. The most important part of budgeting is to keep track of your
expenses as well. If you do both diligently, then you will be able to see the
whole picture of your financial status. You will be able to see what kind of
expenses that you make each month, and whether that amount of expenses is
necessary.
By budgeting, you will also be able to make
smarter financial decisions. You will be able to see type of expenses that you
can cut down or eliminate. You may be going to the nearest cafe for a sip of
coffee more often than you intended, or you have not realized that you have
been paying off a gym membership that you have never gone to. This will enable
you to cut unnecessary expenses out!
- 4. Bonuses
There are a lot of companies that have a bonus
scheme for their employees. This means that they would give their employees a
certain amount of bonus. Most of us would tend to splurge that bonuses. Don’t!
Instead of spending it on something that is not necessary, you can use it to
pay off your debt.
This is also applicable to all of your other
excess money or income that is not budgeted. Maybe you are due for your tax
income next month. Now you better think twice on how to use that additional
income money.
- 5. Side hustle
If you have not had a side hustle, then you should
try to get one. This only means that you are able to manage your time well. A
side hustle is also a commitment. You need to commit some amount of your time
to be able to do so. If you have already been working two jobs, then what you
should focus on is getting a passive income.
A passive income can be described as a form of
income that will not require you to spend some amount of your time. This could
come in a variety of forms. Maybe you have a spare room in your house that you
can rent out. That rent income is a passive income. Because you are not giving
up any of your time to earn that amount of money.
- 6. Debt payment method
There are a lot of debt payment methods that you
can use to pay off your debt. There are some experts that suggest you pay your
bill off starting from the one with the highest amount of interest. In this
way, you will be able to save your money in terms of overall payment.
However, this method might not be suitable for
everyone because it takes quite a while for you to feel the impact. If you are
someone that needs to feel a small amount of winning, then you can choose the
snowball method.
The snowball method basically suggests you pay off
your debt from the smallest amount. This way, you will be able to feel that you
have done at least a small amount of improvement.
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