Getting out of debt can be a painfully difficult process, unlike getting into debt. With mortgages, student loans, credit cards, etc; it can take but a few months to accumulate debt in the hundreds of thousands but an eternity to get out of debt.
According to Experian, the average American carries an average of $6,354 in credit card debt and more than $24,700 in non-mortgage debt such as car loans. Meanwhile, an average student loan balance is at a high record of $34,144.
With an accumulation of all this debt, everyone has a different way of paying off the debt. However, many individuals stick to only one approach until the debt is paid off, not realizing there are multiple ways to get out of debt.
You are on the right track if you want to be more informed of the many strategies an individual should use to get out of debt. In this article, you will find useful and valuable tips to help you get out of debt.
Pay more than the minimum payment
Paying more than the minimum payment will help accelerate the payoff process. The lesser you pay toward your debt balances, the longer it will take to clear your debt.
This strategy works for anyone, whether you are paying credit card loans, student loans, or personal loans. Any penny you spend over your minimum monthly payment goes to your loan principal, which will help you expedite your debt payment.
With this strategy, it is advisable to check with the lenders to be sure there are no prepayment penalties before you get started on your payment plan. If you want to keep track of your debt-paying process, you can seek the help of mobile debt repayment tools like tally and Unbury.me.
Pick up a side hustle
Side hustles are also an effective way to expedite the debt-paying process. Everyone has a skill they can monetize to earn extra cash, be it mowing lawns, playing video games for money, babysitting, cleaning houses, and clothes deliveries.
All these are ways of making money by amplifying your efforts, which will help you a great deal when you want to get out of debt.
Many people indulge in online writing to earn extra income. With the numerous freelancing platforms out there, anyone can earn extra cash. The great thing about these side hustles is that work can be done in your own free time.
This strategy requires an individual to make the minimum payment on all debts except the smallest debts. You will then use discretionary income to pay off the smallest debts.
Once the smallest debt is cleared, you move on to the next debt in line, making the minimum payment, plus the payment amount you were paying to the debt you just paid off. With time small balances will be eliminated, earning the way you invest your pennies in clearing the more enormous debts. Do be aware that this method takes discipline, and is not right for everyone.
Cut down on your expenses
This strategy is quite useful, especially if you are a heavy spender. It is easier and less time-consuming than working extra hours.
Cutting down expenses will help you save a lot and use the saved cash to repay your loan. It is advisable to start cutting down on costs so that you can save more to pay off your debts.
For example, you can cut down on the items you buy when grocery shopping, create an entertainment budget, and reduce the number of times you eat out every month until you get out of debt.
Being debt-free is a lifestyle only a few get to enjoy by selecting the best debt elimination strategy.
Ask creditors for lower interest rates
Picking up your phone and calling creditors to negotiate for a more affordable interest rate might be a good idea. Some creditors will make a deal with you for a more reasonable payment rate based on your payment history and account standing.
By lowering your interest rates, you can secure enough extra cash to help you speed up your debt elimination process. Having excellent debt-paying records will help you with creditors.
Selling things you do not need
Selling things you do not need is also an excellent way to earn some extra cash. Even when you have a shopping list and a strict budget, there are times when you can’t help buying something on impulse.
So, why not consider selling off things that you may not need? This will help you earn some extra dough that will be useful for your debt payments. Consider selling your things to online resellers and Facebook yard sale groups.
Do a credit card balance transfer
Balance transfers help you secure 0% Interest on the annual percentage rate of up to 12 months. By doing this, you can eliminate all credit card interest, although you may need to pay a balance transfer fee.
This method frees up your cash flow, helping you clear the credit card bills hence paying down your debt faster.
Use a debt elimination program
Debt elimination programs like The Money Max Account from United Financial Freedom help you to strategize your finances. With access to financial strategies that have been used by the banking industry, this strategic financial management program helps you to understand your financial situation better and guide you on how to get back on track.
This method will assist with improving your financial knowledge and gives you a clear path to becoming debt-free.
Stop bulking your debts
Bulking of debts can be quite tempting, especially when an opportunity for more loans is granted. Racking up debts makes it more difficult for you to repay the existing ones. For example, limiting your credit card use and not applying for more loans can help you focus more on paying off your current debts.
Getting out of debt can be a complicated and tiresome process. However, with an adequately analyzed debt payment plan and correct the right financial strategies, it can become easier to pay off debts and be completely debt-free.
Therefore, it is advisable to pick a suitable payment plan for your cash flow and help you achieve your goal to get out of debt. If you have tried to get out of debt on your own and are not experiencing the success you would like, it may be time to look at a program designed to get you out of debt.