Living a debt-free life is one of the dreams of many people. However, paying down your debt is easier said than done.
Some people struggle to keep up with their monthly bills and become overwhelmed with the amount of debt they have to pay. In these circumstances, it’s easy to “stick your head in the sand” instead of tackling the issue head-on. This approach only means you’ll be off track for longer, making it harder for you to recover.
In order to help you take back control of your financial situation, we’ve put together some common strategies to help you get out of debt faster.
Pay more than the minimum monthly payment.
Paying only the minimum amount due will keep you in debt for longer. Paying more than the required monthly payment will help you save on interest and speed up the payoff process.
Cut down your expenses.
If you’re living paycheck to paycheck because of your bills, you might want to consider cutting down your expenses, especially your unnecessary spending and expensive habits. And while you’re living on a strict budget, use the money you save to pay down your debts.
Get a part-time job or a side hustle.
Earning more money can improve your capacity to clear your debts. You may have an untapped skill you can use to earn more. Check out outsourcing platforms online or see who else you can collaborate with.
Use the debt snowball method.
The debt snowball method works like this: first, list down all your debts from smallest to largest. Next, commit to make minimum payments on all loans except for the smallest one, which you should pay as much money towards as you can.
Once you’ve paid off the smallest loan, move on to putting all your excess funds to the second smallest while paying the minimum amount due for the others. Do this until you’re debt-free.
Alternatively, make minimum payments on the loans with the lowest interest rates and pay as much as you can on the loan with the highest interest rate. Keep doing this until all the loans are paid.
Or combine both methods. Pay off some of the small debts as fast as possible, leaving less debts to deal with. Then pay as much as possible on the one with the highest interest rate.
Use “found money” to pay off your debts.
“Found money” could be an annual salary increase, a bonus or commission, an inheritance, or maybe a tax refund. Whatever that may be, if you come across an unusual source of income, you can use the money to reduce your debt or at least commit a certain percentage of it.
With discipline and commitment, it is indeed possible to achieve a worry-free life without debts. However, if you need a more focused debt paydown strategy from an expert, get in touch with us today and let’s work out a plan for your specific situation.