Regardless of the kind of debt, you’re in, clearing it can take years. The truth is, there is often only a thin line between your debt spiralling out of control and getting out of debt. The entire journey is usually wrought with headaches and hard work, and it can be confusing and frustrating.
Thankfully, with the right plan in place, you can make the process more seamless. You just need to apply some smart strategies to pay off your debt faster.
Are you ready to get out of debt? These tips will help you get out and stay out of debt.
Consider Using the Snowball Method
First, you’ll have to compile a list of your debts in the order of size. That is, the smallest to the largest, regardless of the interest rate. After this is done, begin to pay off the smaller debts aggressively. For the larger debt, minimum payments will suffice.
When practised properly, you will be able to easily and effectively manage your debt. Then, it is time to ensure that you put measures in place to stop you from ending up in the position again.
Draw Up (and Live On) a Bare-Bones Budget
If you are serious about clearing up your debt quickly, then you’ll have to become very strict with your expenses. A bare-bones budget is a tool you can use. Using this method, you’ll reduce your expenses drastically and live on very little for as long as required.
Your version of a bare-essentials budget will be different from anyone else, but generally cut out “extras” like cable television, eating out and so on. By living on a strict budget, you will be able to free up more funds that can be channelled toward your debts.
Remember, this budget is only a temporary measure. Once you are closer to your goal or out of debt, you can begin to add some extras. Just don’t go overboard.
Sell off what you no Longer Need
One of the quickest ways to get cash is to sell off any belongings you no longer need. We typically have things lying about that we barely use and, frankly, don’t really need. Why keep them? Sell them off and use the funds to pay off your debt
A good old-fashioned garage sale is usually the easiest and cheapest way to sell your barely used belongings for a profit. Alternatively, you can sell your items online via eBay or a Facebook yard sales group.
Stop Using Your Credit Card
If your credit card debt is high, the only way to stop it from going any higher is to stop using it completely. Take all your credit cards and cut them up. Alternatively, you can have them locked up in a safe or hand them over to your parents, a friend, your sibling, anyone that you trust to keep them safe.
As long as you are not using your credit card debt, any option you choose is fine. This might be extreme, but the idea is not to be tempted to use your credit cards until your debt is paid off. Once your credit card is away, you’ll have to really think through your purchases because you will only be working with money from your income.