How eager are you to get out from under your debt and finally become financially free? While working to become debt-free is often an uphill battle, it’s certainly possible.
You don’t have to give up everything and live in a shoe to get yourself out of debt. With that said, here are 8 clever ways to do it without sacrificing everything you love in the process.
Stop Using Credit Cards
If you’re already paying a small fortune in interest and late fees, stop using credit cards. This should seem obvious, but you’d be surprised at how many people who complain about their debt still continue to use credit cards.
Cut your card up. Your debt won’t go away, but your ability to continue using the card will.
Make Spending Cuts
Make cuts to your spending whenever and wherever possible. It’s important that you take a close look at where your money is actually going and separate your needs from your wants. This doesn’t mean you have to stop living or drastically alter your present lifestyle, but it does mean you need to monitor your cash flow a little better.
How often are you eating out? How often do you buy that morning latte? What about going to the movies or shopping? Over time, these little outings and luxuries turn into big money wasters, so make an active effort to spend a little less and save a little more wherever possible.
Pay As Much As You Can
If your monthly debt payment is $500 per month, that’s not how much you should be paying – that’s the bare minimum. If you can pay a little bit more, make every effort to do so.
Yes, it’s important to save. But any leftover money at the end of the month should ideally go towards your debt. Even if it’s just ten dollars, that’s ten dollars less you owe on your debt. That’s progress, albeit small. Celebrate all your small victories – without spending money.
Pay Off High Interest Debt First
Most people like the idea of paying off their smallest balances first in order to get them out of the way. Psychologically it makes sense tackling those pesky small debts.
However, it’s actually smarter to pay off the cards/balances with the highest interest rates first. In the long run, you’ll save money in fees and charges.
Pay Down Debt With Non-Recurring Income
As tempting as it may be, use any nonrecurring sources of income to pay off your credit card debt instead of spending it. For example, tax season means tax refunds for most people – clearly a chance to pay off a portion of your debt. Other sources may include an inheritance or a bonus from work. Look at these little bonuses as an ideal opportunity to pay off debt.
Keep That Momentum Going
So, you’ve finally paid off one credit card and now you think you have a little extra money to spend, right? Wrong. Use the money you were paying on your previous card to help pay off the next one. Keep the momentum going and keep your eye on the finish line. Every card/balance paid off is a success.
Modify Your Lifestyle
Paying off debt doesn’t mean all work and no play. However, it does mean you need to be more careful with how and when you spend your money. Rather than taking a classic family vacation to Disney World, think about toning it down financially instead. There are plenty of ways to enjoy yourself on a budget; you just need to be a bit more creative about it.
Make Weekly Payments
If I told you to pay an extra $100 towards your debt you might just cringe a little. But what if I told you to pay an extra $25 a week? That might seem more doable. Not only that, but paying weekly pays down your debt faster than paying monthly.
If you pay your $100 monthly debt payment, after one year you will have paid $1,200. But if you instead pay $25 per week, you will end up paying $25 x 52 weeks = $1,300 for the year.
Paying down debt is certainly a process, but taking it one step at a time and recognizing your progress along the way will inspire you to see it through.