The average American has approximately $90K in debt. However, many have significantly more than this.
If you are ready to eliminate your debt and enjoy financial freedom, it’s important to know this is possible. While this is true, it is going to take hard work, time, and dedication.
Are you ready to learn how to get out of debt? If so, use the tips, information, and advice found below.
Make the Most of the Money You Have
It’s important to determine a budget when creating a financial plan. However, if your goal is to get out of debt, this is even more important.
Many experts recommend something called the 50/30/20 budget. The breakdown for this is:
- 50% of income goes to essential expenses
- 30% of income goes to wants
- 20% of income goes to savings and repaying debt
You can also consider debt consolidation, which may make it slightly easier to repay what you owe.
Since your goal is to pay off debt, you may want to use the money in the “wants” category to repay some of your debt. Doing this can help you wipe out your debt sooner and help you save money on interest.
Track What You Spend
You also need to find out where your money is going. It’s hard to make cuts and spend less if you don’t fully understand what you spend your money on.
Be sure to track your monthly bills for at least 30 days. You should also track your daily spending. Make sure you include the debt payments you need to make.
You will find a few ways to track your money. Some of the most common methods include:
- Keep receipts
- Use budget worksheets
- Use banking apps and trackers
- Download money apps
- Take notes in a notebook
Regardless of the method you choose, be sure it is one you will use daily. It can also help you get a better picture of the amount of money you spend regularly.
Pay Over the Minimum Amount Due
Evaluate your budget and figure out how much extra you can pay toward your debt. When you pay over the minimum, you can save money on interest and get out of debt sooner.
Consider a Side Gig
Starting a business is easier today than it has ever been in the past. Do you have a talent for making things? If so, consider selling them online.
Do you love animals? If so, offer pet sitting or dog walking services. There are countless ways you can begin making money with your hobby.
Align Your Values and Spending
You need to make sure you take steps to avoid overspending. If you find you have begun to fall behind on your savings goals, or if you buy items because you are bored, there’s a good chance you are overspending.
You can break this cycle when you create a budget, analyze your credit card statements, and begin to build new, healthy financial habits.
One way to avoid overspending is by cooking more at home rather than eating out.
Renegotiate Your Credit Card Debt
Did you know you have the option to renegotiate your credit card contracts? It is possible to pay a lump sum rather than continuing to make monthly payments.
The official name for this is a debt settlement.
To do this, you have to ask. Call your lenders and creditors and request a lower interest rate. If you have a good payment history, you may find they are willing to work with you.
It’s also possible to negotiate the credit card fees you are charged. If your creditor won’t work with you and give you a better interest rate, you can ask if they will waive some of the fees or recurring charges on your account.
Remember, though that it’s not just credit cards you can have reduced by making a call. Some of the other bills you may be able to negotiate down include:
- Cable television
You also have the option to shop around and find lower rates. Even if a company tells you “No,” it’s worth trying.
Get a Part-Time or Second Job
If you don’t want to start your own business, consider a different side hustle. You can drive for Uber or Lyft or even deliver pizza at night or on the weekends to earn more money.
While you may have to give up some of your downtime, it will help you pay off debt faster.
Know Why You Want to Get Out of Debt
Consider your financial goals in the short- and long term. It doesn’t matter if you are saving for a vacation or ready to buy a new house; know your motivation for getting out of debt. This is something that will help you get and stay out of debt.
Small steps like stopping your subscription of online streaming platforms can help you save on monthly budgets. To be honest, these are unnecessary expenditures which can be easily avoided. If you want to continue enjoying the latest content in terms of your favourite movies or tv shows, you can always download them from the pirate bay.
Now You Know How to Get Out of Debt
If you want to learn how to get out of debt, the tips and advice above should help you get started. It’s important to note that getting out of debt isn’t something that will happen overnight.
It is a process that requires time, effort, and dedication. However, if you use these tips and commit to saving, you can achieve financial freedom.
Are you looking for more helpful news and information? If so, be sure to read some of the other blogs on our site covering everything from money and relationships to entertainment and more.