The unfortunate thing is that the space between realizing the importance of paying off your debt and actually getting out of debt can be characterized by heartache and hard work. Paying off your debt, irrespective of what kind it is may take years if not decades.
The fortunate thing is that you can employ strategies to help you pay off your debt in a faster and less painful way. If you would like to get rid of your debt, consider the following tried-and-true strategies:
Paying off More Than the Minimum Payments
If you have a credit card balance of $15,609, which is the average, pay a typical 15 percent APR, and make a payment of $625, which is the minimum monthly amount, you will require 13.5 years to pay off your debt. However, this will only be possible if you do not add to your balance in the meantime, which is a challenge by itself.
Irrespective of the debt you are carrying be it student loans, personal loans, or credit card debt, one of the best way to pay it off faster is to make payments higher than the minimum amount every month. If you do this, you will not only save on interest over the life of the loan, but the payoff process will be speeded up too. To avoid any headaches, ensure that the loan does not charge prepayment penalties before getting started.
Trying the Debt Snowball Approach
If you fancy paying more than the minimum monthly payments on credit cards and other debts, you can use the debt snowball approach to accelerate the process even more as well as build momentum.
The first step is to list all your debts from the smallest to the largest. All the excess funds should be thrown at your smallest balance while you make minimum payments of the larger loans. Once you pay off the smallest balance, start putting the extra money towards the next least debt until you have paid it off, and so on.
The small balances will disappear one after the other over time, thus freeing up more dollars for you to throw at the larger loans and debts. The “snowball effect” helps you pay the smaller loans and debts first thus logging a few “wins” for the psychological effect while allowing you to save the largest debts and loans for last. The ultimate goal is to snowball all the extra dollars towards your debts until you demolish them and you become free of debt.
Picking Up a Side Hustle
Using the debt snowball method to attack your debts will help speed up the process, but earning additional money will help amplify your effort further. Just about everyone has a monetizable skill or talent, whether it is becoming a virtual assistant, cleaning houses, mowing yards, or babysitting.
Websites such as Upwork.com and TaskRabbit.com allow just about anyone to find some way to earn extra money on the side. The important thing is to take all that extra money and use it to pay off your debt immediately.
Create and Operate on a Bare-Bones Budget
If you are really looking to pay down your debt faster, you need to cut your expenses as much as possible. A bare-bones budget is one of the tools that you can create and use. Using this strategy, you can cut your expenses as low as possible and live on as little as possible for the longest time possible.
Everyone’s bare-bones budget looks different, but it should not include any “extras” such as cable TV, eating out, or any unnecessary spending. While living on a strict budget, it is important to pay considerably more towards debts.
Don’t forget that a bare-bones budget is meant to be temporary. Once you get out of debt or are much closer to your goal, you are free to start adding discretionary expenditure back into your monthly plan.
Selling All That You Don’t Need
If you would like to raise some cash quickly, it can be a good idea to first take stock of your belongings. Most people often have stuff lying around that’s rarely used and can live without if they really needed to. You should consider selling the extra stuff and then use those funds to pay off your debts.
If the neighborhood you live allows it, a garage sale is usually the easiest and cheapest way to dispose of unwanted belongings for a profit. The other option would be to sell your items on one of the numerous online marketplaces such as eBay, Craigslist, among others.
Get a Seasonal, Part-Time Job
The holidays are coming up soon and local retailers are looking out for seasonal, flexible workers to ensure that their stores stay operational during the festive season, which is usually quite busy. If you are able and willing, you might start working one of these part-time jobs and earn some additional cash to pay off your debts.
Plenty of seasonal jobs are available even outside of the holidays. Springtime brings the need for seasonal farm jobs and greenhouse workers, while summer requires tour operators and all types of outdoor, temporary workers from landscapers to lifeguards. Fall brings seasonal work for pumpkin patches, haunted houses, and fall harvest.
The Bottom Line: Irrespective of the season, you can easily find a temporary job without a long-term commitment. However, if things get too heavy, remember it’s possible to get help.
Ask for Lower Credit Card Interest Rates & Negotiate Other Bills
If your credit cards attract such high interest rates that you find it close to impossible to make any headway on the balances, you should consider calling the card issuer and negotiate. You might not believe this, but it is actually quite common for people to ask for lower interest rates. If you have a solid history of paying bills on time, there’s always the chance that you will get a lower interest rate.
Beyond the interest on your credit cards, you can negotiate down or eliminate several other types of bills. Always remember that the worst that anybody can do is say no and the less money you pay for the fixed expenses, the more the money you have available to pay off your debts.