Debts have become an integrated part of our culture to the point where one will forcefully outweigh their merits to their faults, while in truth, debts can effectively cause a major financial crisis, compelling you to handle the consequences for several years to come. Luckily, there are hundreds of people who went in and out of debt, so proven methods of combating debts have been around for a while now; they are easy to follow but will need dedication and a strong will.
If you want to start with this, here are some helpful tips.
Put Your Credit Cards Aside
Getting rid of all your credit cards is probably a wise step to take, especially if they’re the reason you’re in debt in the first place. Usually, credit cards will cost you the biggest interest rate, so after only a short amount of time, you’ll find your balance has gone out of control. At this point, you must stop regretting your actions and start thinking of how you can stop using them altogether. It might be a hard step to take, as you’ll feel as if you’ve nothing to depend on, financially speaking, but it is still an important step. You can try freezing your cards or even locking them away.
Start Budgeting
One trick that will actually help you get out of your debt is budgeting. You have to start establishing a realistic financial plan. Make sure that your budgeting plan covers your monthly expenses and leave a set amount of money for house maintenance, insurance, financial emergencies, and, most importantly, monthly payments for your debts. Make sure that you set money aside for any other emergencies because if you don’t, you might end up using one of your old credit cards. You can create a savings account with automatic transfers on your payday. You should also keep a list of what you saved, what you’ve spent, and what you’ll likely need to spend in the future.
Pay More
it’s common sense that the more you pay, the sooner you’ll get rid of your loans. Whether you are carrying personal loans, student loans, or credit card debts, you might want to try to increase your monthly payment to speed up the process of paying it all up. Sure, you may not have that luxury when you’re overwhelmed with debts, but you can try to do this when you pay off your smaller debts, then you can increase payments on your larger debts when the opportunity presents itself. There are tools and apps which will help you achieve this, such as ReadyForZero and Tally.
Side Hustle
If you estimate that paying more won’t even help speed up the process of paying all your debts, you can try working a side hustle and increase your monthly income instead. Besides your current job, you must have a talent or a skill that can be monetized. The simplest of tasks, like mowing yards, cleaning houses, babysitting, or even becoming a virtual assistant are great options for increasing your monthly income and making bigger payments on your debts. You can use websites like Upwork.com or TaskRabbit to find a side hustle or you may ask friends or close family members for recommendations.
Debt Snowball Method
If you haven’t heard about this method before, the debt snowball method basically aims at making bigger payments to speed up the process of paying debts similarly to the previous strategy. First, you can list all your debts from smallest to largest, set aside any extra funds at the smallest debts while making the minimum payments on the larger debts. Once your small debts are paid off, you can add the extra money you have on the smallest debt until that one is paid off too. After that, it will be easier to move to the bigger payments and pay them in a short amount of time. the winning feeling you’ll get from paying the smaller debts will have a positive effect on you, which will spur you on to pay the bigger debts.
Freelancing
If you don’t find a proper side gig, you can try out freelancing. Luckily, there are multiple freelance opportunities on the market all the time, so you’ll surely find someone looking for a person with your particular skill set to work for them. This will help you earn a few dollars on the side and accumulate a decent amount of cash, which will help you either with doing the debt snowball method or simply with all your debts in general.
Now that you know these easy ways of getting rid of debt, you can start with establishing a plan. It might indeed take a while to become completely debt-free but let that be a teaching experience for you to help you better manage your finances in the future.