Landing in debt isn’t uncommon. The average American has $90,460 in debt. If your debt is less than this number, then you’re already off to a good start.
If you’re in even more debt than this, then don’t panic. There’s still hope. There are a few different ways you can get out of debt.
What’s most important is doing it the right way to ensure no debt and a higher credit score. Thankfully, there are a few tips for paying off debt that you can consider trying. In the guide below, you’ll find a few of those top tips for paying off debt.
Continue reading to find out more!
1. Start Prioritizing
A good way to start things off is to begin organizing all of your debt. Prioritize which debt has the highest interest rate and which should you pay off first. If you have several credit cards you owe on, then place them in order from the highest to the lowest interest rate.
Then, start paying them off one by one, starting with the credit card with the highest interest. You can do this by making minimum payments on the other cards while you pay more than what’s required on the card with the highest interest. If you can only pay an extra $5 or $10 then, that’s okay.
Anything will help.
2. Take Out a Debt Consolidation Loan
Debt consolidation loans are one big loan that you then use to pay off several smaller loans. When you consolidate your personal loans you combine all of your debt into one loan with one payment and one interest rate. This not only makes it easier for you to keep track of due dates and payments, but it also makes it easier for you to pay off your debt.
Once you consolidate your debt, you’ll then select a schedule for when you want to make your payments. These payments will need to be made on time, so consider a date that works best with your pay schedule and other bills such as rent, utilities, car insurance, and more.
3. Pay Your Bills on Time
Paying your bills on time will not only ensure you pay off debt quickly, but it’ll also ensure your credit score doesn’t drop. If you have multiple bills each month (as almost everyone does) then get organized by writing down each bill, the amount, and the due date. You can do this one a dry-erase board on your refrigerator for example to help you stay on top of things.
Each time you make a payment, erase the due date and write the new one. For example, if you had car insurance due on 07/12, then you’d erase the “7” and fill it in with an “8” to remind you that it’s now due on 8/12.
It’s also beneficial to pay more than the minimum when possible. This will also help you pay off debt much more quickly.
4. Create a Budget
Think about how you found yourself in debt in the first place. Maybe you had no choice due to certain circumstances, or maybe you weren’t paying attention to how you were spending your money. Either way, it’s time to create a budget.
Creating a budget will help you stay focused and will help you understand your income versus your bills. Your budget should track all of your expenses and your income. This means you’ll know exactly how much you bring in each month and how much you owe in bills or debt each month.
How much money do you have left for the month after paying your bills and debt? How much more can you place towards the debt with the highest interest rate? If you don’t have much money left for the month, then it may be time to start considering a second job, side hustle, or a different job with higher pay.
5. Consider a Side Hustle
There are many different side hustles for you to consider. It’s never a bad idea to have multiple streams of income. A side hustle will increase your monthly income and help you pay off some of that debt without causing you to live with the bare minimum each month.
There are many great side hustle ideas such as dog walking or sitting, babysitting, tutoring, or working part-time doing something you enjoy. Some people have even found ways to make an income off of their hobbies such as selling artwork, photography, and more.
6. Remove Credit Card Info Online
If you have any credit card information saved online on your favorite shopping sites, then now is the time to remove them. It’s all too tempting to spend money when you can scroll through stores online and conveniently make a purchase with one click of a button. When you remove the credit card information from these websites, it makes it more difficult to make the purchase.
Remove all credit card information online to reduce the temptation to spend.
7. Make a Change in Spending Habits
Now would also be the best time to make changes in your spending habits. There are a few changes to consider, such as cooking at home more often rather than eating out a lot. Find other things to do to keep you content if you shop out of boredom.
If you like to spend money when feeling upset as a form of therapy, then start considering other options to make yourself feel better and take your mind off of things such as picking up an old favorite hobby of yours.
Keep These Tips for Paying Off Debt Handy
When you find yourself in debt, be sure to keep these tips for paying off debt handy. It’s a great idea to try more than one of these (if not all) to help you pay it off faster. Remember, the faster you pay off your debt, the quicker you can begin living a debt-free life which means more money in your pockets!
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