The average American carries approximately $38,000 in debt and that’s not including mortgages.
It’s no wonder so many people are looking for ways to get out of debt so they can live a more financially stable life. The good news is, with time, effort and good advice, you can pay off your debt and have a fresh start.
If you are ready to take this journey, here are five ways to erase debt.
- Spend Less Money
The reason you are dealing with debt in the first place is likely due to overspending. To get out of debt, the first step you’ll need to take is to curb your spending so you can stop incurring even more debt.
You can do this by canceling unnecessary subscriptions, following a reasonable budget and being mindful about what you are buying.
- Earn More Money
While getting out of debt may start with spending less, you can supercharge your efforts by finding a way to earn more money. This is especially helpful if you are already strapped for cash and are having a hard time paying your current bills.
There are many ways to earn extra money from driving for Uber or Lyft to implementing more complex passive income strategies.
- Pay More Than The Minimum Balance
Paying the minimum balance on your loans and credit cards may feel like you are making a dent in your debt but the reality is, you’ll take longer to pay off debt and maintain a higher credit utilization ratio when you pay the minimum balance.
To get out of debt it’s best to pay more than the minimum balance. Consider paying double or triple the minimum amount to pay off the debt as quickly as possible. Not only will you be able to erase your debt faster, but you’ll also save on interest fees.
- Follow The Debt Snowball Method
The Debt Snowball Method was created by financial guru Dave Ramsey and it’s been used by many people to successfully pay off their debt and claim their financial freedom.
In a nutshell, this method works much like making a snowball. You start with your smallest debt and once that debt is paid, you roll the money into the next smallest and the next until your small payments have “snowballed” in momentum and you have become debt-free.
With this plan, you would continue paying the minimum balances on all accounts and focus on all your debt except for your mortgage.
- Consolidate Your Debt
Do you want to get out of debt fast? Consider debt consolidation.
Many details go into debt consolidation but in short, you are taking out a single loan to pay off all of your debt at once. This lowers your interest rates and gives you the added convenience of paying off one loan instead of paying several at a time.
Debt consolidation helps reduce your debt and structure it in a way that allows you to pay it off faster.
How To Erase Debt: The Bottom Line
By implementing some of these methods, you can erase debt and enjoy your fresh start and newfound financial freedom.
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