Seven Ways To Get Rid Of Debt Faster
If you are looking to get rid of debt, you are not alone. Consumer debt is upwards of $14 trillion and climbing in the United States. Of this, student loan debt and credit card debt accounts for about $2.5 trillion. To say we are a nation of debt would be an understatement. The reality is that many people use credit cards to help them live and pay bills. Not to mention, most Americans also spend more than they make. It is no wonder people are drowning in debt and the thought of facing that debt is overwhelming.
With that being said, people are often forced to face their debt at some point. Whether it be an unexpected crisis like the one we are having or a serious illness, sooner or later the debt has to be dealt with.
Here are seven ways to help you get rid of debt faster
1. Pay more than the minimum
If you are carrying a decent amount of debt and you are only paying the minimum month after month, you can expect to not only take years to pay if off but to also pay a heft amount of interest. If you continue to add to the balance, that makes your financial situation even more volatile.
Whether your debt is in the form of student loans or credit cards, the only way to get rid of debt faster is to make more than the minimum payment. Feel like you don’t have the money to pay more each month? I challenge you to take stock in your spending. More than likely you are spending a good chunk on “non essential” things. Those Starbucks runs, the quick drive thru lunch, the gym membership that you don’t use. You get the picture.
Once you lay out all your expenditures, determine how you can avoid spending money in those areas. Buy a coffee machine, make your lunches, meal prep on Sundays. These are all small changes you can make to your daily life that will help free up money you can put towards your debt. Also, if you are not using a budget, it is high time you create one.
2. Try the debt snowball method
If you are looking to get rid of debt quickly (who isn’t), the debt snowball method may be a good fit for you. In order to get started with this method, you will want to make a complete list of your debts from smallest to biggest.
Next, you want to put as much money as you can towards the smallest balance while you make minimum payments on the larger balances. Once you have paid off the smallest balance, you move to paying off the next smallest balance and so on. Eventually, your smaller balances will be paid off and that freed up money can now go towards paying more than the minimum on your larger balances. The reason this method works for some people is because when you pay down those smaller debts, you are experiencing small wins. This helps give you the motivation to keep “logging” those wins and until you’re finally debt-free.
3. Get a side hustle
If you don’t have enough money to make more than the minimum payments on your debt, it may be time to start a side hustle. Now more than ever, there are opportunities for jobs that can be done on “the side”. The best part about a side hustle is that you don’t need a specific set of skills and these jobs are typically flexible. You can become an Uber driver, virtual assistant, a server and more. Sites like Upwork is where you can offer your freelance services and if you are handy, sites like TaskRabbit are worth taking a look at. Any money you make from your side hustle should go straight to paying off your debt.
4. Us a bare-bones budget
If you are serious about paying down your debt, you are going to need to cut down your expenses. In order to do this effectively, adapting a bare bones budget is the best idea. With this type of budget, you are solely focused on your “essential” expenses. This means you are cutting out cable, eating out, your gym membership etc. You do not put any money towards “non essential” expenses. You are basically cutting down your expenses to as low as they can go and you will live off of as little as possible for as long as you can. This type of strict budget should free up money to put towards your debt.
This budget style is very restricting and is not meant to be used indefinitely. As you move closer to your goal, you can start freeing up some money to go towards discretionary spending back into your monthly plan.
5. Sell stuff
Another way to make some quick cash is to sell some of your stuff. This could be anything from gently used clothes to electronics. There are plenty of online options for selling your stuff like Facebook marketplace, Letgo, Poshmark, Ebay and more. Any money you make from this can be put towards your debt.
6. Negotiate with creditors
Depending on what your interest rates look like, you always have the option of calling your creditors to see if you can negotiate them down. Interest rates are not set in stone so this is definitely something you should be doing. If you have a strong history of paying your bills on time, there is a good chance you will be able to get your rates lowered.
Besides your credit cards, everyday bills can also be negotiated. Your cable bill, medical bills and internet service are just some of the things you can potentially negotiate down. They may or may not agree to it but you won’t know unless you ask.
7. Kick any expensive habits to the curb
If you’re in debt and you consistently have trouble paying your bills, you need to evaluate your habits. This is especially important if you make a decent living and find yourself living paycheck to paycheck. This is a sure sign you are living beyond your means.
Expensive habits include anything from smoking and drinking alcohol to spending money on clothes and shoes. As you can see, these are non essential expenses that are unquestionably costing you more money than you think. If you are saying to yourself “no way” to quitting drinking, your problem is not just the money but the reasons why you are turning to alcohol. Now we are talking about more than just an occasional happy hour with friends. In any event, the idea is to look at where your hard earned money is being spent and do less of spending it on those things.