It’s no secret that accumulating debts can impair your ability to exercise full financial freedom. So, why do we still accumulate debts? Perhaps we spend more than we earn. Or, maybe the condition of the economy is making it harder to make ends meet. It’s possible that we also fail to create a budget and stick to it. No matter the reason, debts are a painful thing to tackle. But, you can do something to keep it from destroying your financial dreams. Learn how to get out of debt fast by following these tips and tricks.
Increase your Monthly Payments
The type of debt in which you are hoping to get rid of doesn’t really matter. Whether it’s a personal loan or credit card debt, the only way to pay it off fast is by making it a point to pay more than the minimum monthly payment. You may have other important priorities such as allocating funds to your savings, but don’t you think that you can save faster if you don’t have additional debts to tackle? Free yourself of these financial obligations and use the extra cash to pay more than your monthly dues.
Prioritize Debts with Higher Interest Rates
Some people would prefer the so-called snowball method when clearing up their debts. The snowball method refers to the process of paying off all of the smallest balances while making minimum payments on debts with larger amounts. As soon as smaller debts are cleared, the extra funds can then be used to pay bigger loans and debts.
While this is, of course, an option that you can consider, choosing to prioritize debts with higher interest rates also has its advantages. When all of the huge loans are paid off first, it will then be easier to start building your savings while taking care of the smaller loans.
Limit your Credit Card Use
If credit cards are one of the reasons that you’ve gotten into debt, it is best to limit, if not stop, using credit cards for your purchases. Using credit cards is convenient because, besides the fact that it allows people to complete cashless purchases, it also offers nice perks like cash advances.
However, the more that you swipe, the higher the balance climbs without you noticing. The next thing you know, your bill is so much larger than you expected. Leave your credit card at home if you must. Use cash for your daily purchases, even when grocery shopping. This will teach you how to budget and will help you to cut your spending costs.
Cut your Expenses
It’s never a good thing to get drowned in debt. Not only is it stressful, but it also keeps you from reaching your financial goals. Take the time to look closely at where your money is going. Create a list of your daily, weekly, and monthly expenses. Then, see which items can be eliminated from the list. Classify the items into needs and wants. Which items under “wants” can be removed? Maybe you can skip the weekly dine out event with friends and opt to have your gathering at a friend’s home instead? Or, consider skipping the morning coffee at your favorite expensive cafe on the way to work and settle for making your own homemade brew before leaving home?
There are many ways to save money in order to generate extra cash for paying off debts.
Look for a Side Hustle
Got free time on your hands? Try looking for a side hustle so that you can earn extra cash. If you look, there are likely lots of seasonal jobs available. Use whatever skills and talents that you may have- photography, writing, music, etc. Also, try out online freelancing jobs. The cash that you’ll be able to generate from these jobs will be a huge help with paying off your debts.
Sell Stuff that you Don’t Need
Another excellent way to produce funds that help you to pay off debts is to sell stuff that you don’t need or use. Declutter your home and look for clothes, shoes, furniture, books, and any other items that can still be sold and used. The amount of money that you generate from selling items may not be very substantial, but it can certainly be used to help eliminate your debts.
It’s never easy to live with debt, but there’s something that can be done to get out of the hole. When you’re ready to save, be sure to keep your savings in a place where it can grow – Calcite Credit Union. Feel free to give us a call for more information.