Millions of Americans are struggling to dip themselves out of debt. Odds are that you owe someone money, whether it be from student loans or from overspending! The solution to getting out of debt is the same no matter what. It’s nothing that you can’t handle. Have a clear goal in mind to keep yourself motivated.
1. Stop Spending On Credit: It’s that easy - if you have outstanding credit card debt, then stop contributing to it. Stop using credit cards that add on more and more debt until you get a handle on how to effectively budget. Use debit cards and cash until you are able to eliminate the current debt on your credit card.
2. Negotiate a Lower Rate: Talk with your lenders and see if there is anything that they can do to help you consolidate your debt to make paying it off easier. They want to get the money back that you owe them. They’ll be able to work with you and can possibly change your interest rates or give you a payback plan.
3. Reduce Your Budget: To knock out the debt quickly, reduce the amount of money that you are spending elsewhere. Put more of your paycheck towards paying off the debt, rather than spending it on concerts and clothes. Live dramatically beneath your means. This is the most difficult part of the entire process. If you struggle with creating a budget, ask a friend to help you look at it impartially. List out everything that you are currently spending, from everything that is necessities to things that are luxury items. Strip your budget down to as bare bones as possible. Things like rent and car payments are things that must be paid. Other things like going out to eat, shopping, or even the amount of gas you buy can change. Be more diligent about packing your lunch for work and see if someone is interested in carpooling. Changing your lifestyle is what will push you over the edge to help reduce your debt fast. The more that you can save, the more you can put into the outstanding debt.
4. Pay More Against the Debt: Now that you have extra cash in your pocket from not spending money on morning coffee, you’ll be able to get out of debt faster. The more that you can save, the more you can put into the outstanding debt. It may not be the most fun way to use your money, but keep in mind that it’s only for a time. Once you master your current debt, you can loosen up on your budget and allow more luxury things into the mix.
Don’t let yourself slip back into your old ways, landing you in debt again. Figure out what your monthly expenses are and set a budget to live beneath that number. Things always end up costing more than you expect. The little daily things usually drain your budget. Change your lifestyle and have more money to pay off your debts and get back on track.