For most people, debt is an ugly word. Fancy language like ‘leverage’ and ‘financing’ apply only to businesses that flip debt and turn it into profit.
If you’re up to your ears in consumer debt, there are ways to become debt-free quickly, so you have more financial flexibility. Take a look at these 7 tips to help you become debt-free.
Hands Off Credit Cards:
If you’re paying interest on your credit card balances each month, chances are you can’t afford what you’re buying. Credit cards only work for you if you pay the balance in full before your due date.
The first step in getting control of your current debt is to avoid creating any new debt. Credit card balances can be reduced little by little once you stop adding to the pile.
You’ll still have to pay interest on any balance you carry month after month, but the amount will decrease with time.
2. Decide How to Pay:
There are many debt repayment plans that financial experts swear by. Investigate the different repayment options to see which one works best for your lifestyle.
You don’t want to try and reinvent yourself to make a financial strategy work. If it’s not a good fit, you’ll end up using the strategy short term and eventually falling back into old habits.
Test out strategies on paper first. Download your bank statements to get an idea of where your spending and notice your behavior.
A popular method of debt repayment is the snowball method. It’s the process of paying down your debt from smallest to largest regardless of interest rates.
It’s an excellent method to help get you psyched about repaying debt. As you see your balances reaching zero, the idea is that you’ll get more motivated to get rid of debt faster.
3. Create a Value-Based Budget:
Money management is psychological. You want to eliminate any spending that doesn’t matter, but not get rid of spending areas where you find comfort.
For example, if you have a weekly date night with your spouse, this is an area with a much higher value than a gym membership you haven’t used in a year. Create a budget that still allows you to live your life without inconvenience or feeling a sense of lack.
Making small changes also help with debt repayment motivation without being a shock. Think of how you react to new diets that require too many restrictions over the long term.
Many people end up breaking the diet and gaining more weight than before they started the diet. Avoid this trap with creating your household budget by holding on to small spending habits that give you a feeling of normalcy.
4. Side Hustles:
Just because you love your daily latte doesn’t mean you should go broke paying for it. Look for side hustles that pay for your weekly luxuries, so you don’t have to go without.
Use your regular income to pay down your debt. Side hustles range from dog walking to driving Lyft.
In the current gig economy, there are dozens of ways to extend your services on your schedule. Use this money to pay for all the things you feel like you can’t live without.
If you decide to use the snowball method, the extra money you make each month can be applied to the current balance you’re paying down.
5. Don’t Glamorize Being Debt-Free:
Being debt-free is a lifestyle, not a destination. Once you pay off your credit card balances, there is no physical barrier preventing you from running up your balances again.
Avoid glamorizing being debt-free. It’s a long road if you do it in a way that makes the most sense for your current lifestyle.
A debt-free lifestyle is all about choosing good financial habits over the long term. If your monthly budget is based on your values, you’ll have a much easier time becoming and remaining debt-free.
6. Sell Something:
Most people think of spending less in order to create more money to pay down balances. But selling things you no longer need or creating an asset and selling it is also a great idea
Use sites like Decluttr to sell old phones and TVs you no longer use. Turn your hobby into cash by becoming an Etsy seller.
These ideas are great for anyone who can’t squeeze gigs into their schedule due to work obligations or family. There are lots of ideas to make money without leaving your home as long as you’ve got the talent to pull it off.
7. Consolidate Your Debt:
Unless your bills are on auto-pay, managing multiple creditors is a chore. One way to avoid tracking multiple bill payments is to consolidate your debt.
Debt consolidation gives you the opportunity to reduce the amount you pay in interest each month in one single payment.
The key to getting the best out of a debt consolidation offer is to do your research. Not all debt consolidation companies are created equal.
Beware of scams by looking the company up on Better Business Bureau before handing over your personal information. Learn more about debt consolidation options on Debthunch before getting started.
8. Eliminating Debt for Good:
Becoming debt-free is a long term goal that you should pursue to create permanent habits. Many people throw around the phrase ‘financial freedom’ as if it means spending money, however you want.
But the key to actually having freedom isn’t in your spending but finding the discipline to remain unburdened by debt. For more information and lifestyle tips, visit our blog for updates.