Do you feel like you’re drowning in debt? Are you sick and tired of staring at bills and financial statements?
You’re not alone. The vast majority of Americans now have an average of $38,000 in personal debt. Only 23% of people currently live with no debt to their name.
Don’t panic! There are ways to get out of debt and they don’t involve relying on more loans and risky financial tricks. If you want to learn how to pay off debts, check out these eight techniques below:
1. Pay More Than the Minimum
As much as possible, pay more than the monthly minimum. If you owe a total of $1,000 and your bill states you need to pay $120, try to pay $200 or $250. This ensures you won’t suffer much when the balance rolls over to the next month.
If you can, pay the whole amount for one bill but make sure you can still pay the minimum on your other debts. Paying like this ensures you’ll maintain a good credit score while dealing with all your debts.
2. Use the Snowball Method
Learn how to determine your debt to income ratio. You should figure out where you are financially and if you’re earning enough to pay off debt. Once you got this done, list down all your debts and arrange them according to their size.
This technique states you should pay the minimum on all your debts, ensuring they don’t grow and get out of hand. However, you should put more money in the lowest debt, guaranteeing you pay it off quickly. Once you’re done paying that, use the extra money on the next lowest debt so you can cross it out quickly too.
3. Create and Follow a Budget
Listed all your debt and allocated money to pay them all off? The next step is to take the remaining money you have and create a practical budget.
You’ll want to make sure you can pay off your usual bills, such as rent, car payments, and Internet bills. The next priority should be your basic needs such as food and medications.
Everything else isn’t crucial so you should let them go until you can pay off your debts. Take the extra money you normally would use for hobbies and allocate them to pay loans and credit cards.
4. Let Go of Expensive Hobbies/Habits
Yes, you will need to let go of your hobbies and habits.
The biggest thing to let go of is drinking. You will have to learn how to say no to friends and coworkers inviting you over to drink and party.
Do you love to play video games? You might have to reduce your game purchases to only one game per month or two. The good news is there are many affordable indie games and free-to-play games to get into for the time being.
Are cars your passion? It might be time to sell the second car in your garage — more on that in a bit — and put the money on paying debts.
5. Sell a Few Things
Look at everything you don’t need or use. As mentioned, you should sell any extra cars you have, extra clothes, gaming consoles, or the extra laptop or phone you might have. If you rarely watch TV, it might be time to sell that too and settle on watching on your phone or laptop.
You can sell extra items during a garage sale or online. There are many options available, like eBay, Facebook Marketplace, or Craigslist. Whatever you make from the sales, put it into paying down your debt.
6. Get a Part-Time Job
Are you still struggling to pay off debt and live a somewhat comfortable life? Your debt-to-income ratio might be off-balance and you might need an extra source of income. Fortunately, it’s not too hard to find a suitable outlet these days.
You can get work on Upwork, for example, as a freelancer. This is a great platform for people who know how to voice act, write, do SEO, create art, or design websites. You can find jobs for logo designing, blogging, transcription work, and more.
Other platforms include Fiverr, Freelancer, Hubstaff Talent, and Credo.
Don’t stop there. You can work as an online tutor, a driver for Uber, or as a babysitter or pet sitter. Make sure you take the extra income and pay off your debts.
7. Shop With a List
Whenever you go shopping, make sure you have a list. Stick to your shopping list. This can ensure you won’t go over the budget.
For example, your shopping list should already account for all the food you’ll eat until the next payday. You should leave 10% space in case some of the food on your list increased in prices. If you ended up spending less than expected, pay debts and bills with the little extra cash.
8. Use Extra Income Wisely
Anytime you get extra income, use it to pay your debts. This can include money from tax refunds, gifts from your relatives, a bonus or raise at work, or cash you found in the house. Anything that didn’t come from your regular salary should go into paying off bills and debts.
Tax refunds, in particular, can be incredibly high. You might get enough to pay a whole month’s worth of credit card bills or a loan you need to clear. Don’t waste the free money so use it wisely.
Use These Ways to Get Out of Debt!
Life can seem depressing when you’ve got all these bills and debts to pay. However, you can use these ways to get out of debt and climb your way back out. In due time, you’ll be able to enjoy life more!
Of course, these are only some of the financial tips you’ll need to survive. If you want to continue learning other tips, like how to manage your credit cards, feel free to read through our other articles right here, right now!
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