The average American is $52,940 in debt. Life is expensive, and things like student loans, car payments, and credit card bills can quickly rack up.
If you’re struggling with debt, you’re not alone—it’s something almost everyone has struggled with at one point. It’s not a great feeling, but high debts can also do damage to your credit score, so it’s smart to pay them off as quickly as you can.
Are you wondering how to get out of debt fast? If so, good news—it’s definitely possible!
Keep reading to find our top tips for managing your debt and getting your finances back in order.
Work Out Exactly What You Owe
Before you can figure out how to get out of debt, you first need to work out exactly how much debt you have. We get it—it can be confronting!
No one wants to look at that pile of unopened bills or face the music of exactly how much debt they’re in. However, you can’t solve the problem until you work out exactly how big it is.
To do this, it helps to sit down at a table with all of your bills printed out. You can even make a spreadsheet of how much money you owe and who it’s owed to, so you can visualize your overall situation.
Once you know the extent of the problem, it’ll be easier to manage—we promise!
Make a Plan of Attack
Ok, now that you’ve worked out how much you owe, it’s time to start thinking about a plan. Remember, you aren’t going to need to pay off everything overnight, so this will take time—but you will get there.
It generally helps to triage your debt, meaning work out what debts are most urgent and aim to pay them off first. If you have any overdue debts, or debts with super-high interest rates (like payday loans), try to pay these off first.
This is for a few reasons. First, overdue debts can negatively impact your credit score, which will make it harder in the future to do things like applying for car financing or renting an apartment.
Also, debts with high interest rates are costing you lots of money, so the sooner you can pay them off, the better you’ll be.
You don’t necessarily need to close credit cards with high interest rates, but you do want to pay them down quickly to a zero balance.
Make a Weekly Budget
The next step is to make a budget. Look at all of your outgoing expenses and work out exactly how much money you need for essentials like rent, food, and medication.
You can also budget a small amount per week for unexpected expenses or a treat, like one dinner out per week.
The rest of your income should go towards paying off your bills. It’s not fun, but the sooner you get out of debt, the sooner you can get back to saving more money.
Try your best to stick to your budget plan, at least until you’ve greatly reduced your debt.
Look for Ways to Cut Costs
Managing debt sometimes means giving up a few luxuries. No one wants to give up the things they enjoy, but if you’re willing to cut a few costs, you can pay off your debt quicker.
Think about substituting some expensive activities for cheaper ones. For example, could you give up your gym membership and work out at home?
Or, instead of ordering takeout a few times per week, can you cook at home and make your own pizzas, instead of getting delivery?
If you’re having trouble coming up with ideas, it never hurts to ask a parent or trusted friend to help you. Often, two people looking at one budget can make it easier to come up with creative ways to cut costs.
See If You Can Reduce Your Interest Rates
Often, the biggest problem with debt is interest rates. Your interest rate for credit cards and loans is the additional cost you pay back per month, as your fee for borrowing the money.
If you don’t pay bills off on time each month, the interest rates compound, and can sometimes become larger than the original loan.
To help with this, reach out to your creditors and see if they would be willing to lower your interest rates at all. It’s not always possible, but it never hurts to ask.
Another way to do this is with a consolidated loan, like the Plenti Debt Consolidation Loan. Essentially, this means all of your debts will be compiled into one monthly repayment, with a manageable repayment fee.
Make Extra Payments
If you’re able, it’s a great idea to make additional payments towards your debts. By paying off more than the minimum, you’ll be able to pay off the debt sooner.
Paying off debts sooner means you’ll also pay less in interest over time. Although it feels like you’re paying more money, because your monthly payments are higher, it still saves you money in the long term.
Contact a Debt Counselor
If you could benefit from professional help, you can always contact a debt counselor. Debt can be overwhelming and can even impact your mental health, so know that there are a number of organizations that can help you manage.
Debt creditors will act as a middleman between you and your creditors, negotiating a fair monthly payment for you. However, debt consolidation can sometimes be harder if you have a poor credit score, so you might want to check your credit score first.
However, if you’re feeling depressed, angry, or experiencing severe anxiety over your debt, you can also speak to a therapist. They can help you cope with the situation you’re in and help you improve your mental wellbeing.
Pick Up an Extra Job
One thing that can help pay off debt sooner is more income, so why not think about a side hustle?
Even if you’re working full-time, there are lots of ways to earn extra money in your free time. Yes, it means working additional hours per week, but if you’re willing to do it for six months or so, this might be enough to pay off your debt.
You can do just about anything to earn extra money, like driving for Uber, having a yard sale, or starting a pet-sitting business. However, some of the best-paying side hustles include website design, social media management, and resume writing.
So, if you have online skills, you can make serious money that you can put towards your debt payments.
Come Up With a New Savings Plan
Once you’ve started to pay off your debt, it’s time to think about what happens next. It’s always smart to have some savings for a rainy day, so think about how you’ll save money for your future.
Many people find it helpful to set goals, so think about how much you’d like to save each month. Then, set up an automatic bank transfer per week for that amount into your savings account.
That way, the money will be automatically saved, so you won’t feel tempted to spend it.
Change Your Habits
After you’re out of debt, you don’t want to get back into it! This is why you want to spend some time thinking about what caused you to get into debt in the first place.
Can you change your habits to avoid this happening again? For example, if shopping is your vice, set yourself a firm shopping budget per month and stick to it.
Once you learn more about the reasons behind why you were in debt, it can be easier to make some changes to your financial habits.
Get Out of Debt With These Tips
It’s not always easy to get out of debt, but it’s certainly possible! Millions of people have done it, so as long as you’re willing, dedicated, and motivated, you can do it too.
To get started, use the guide above to take control of your finances, working out how much you owe. Then, make a plan for yourself, outlining how much you’ll repay each month.
You can work towards a date in the future—your debt-free date. It’s an amazing feeling to live free of debt!
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