American households have a record $14 million dollars in debt.
This includes debt from credit cards, mortgages, student loans, and other sources. This number keeps going up.
Living with debt doesn’t have to be your reality. Many Americans have successfully eliminated their debts and now have zero debts.
Are you burdened with uncontrollable debt? Are you sick of watching your paycheck go towards multiple debt payments each month?
There are some things you can do to reduce and ultimately eliminate your debt. Keep reading for our top 7 tips for getting rid of debt for good.
1. Avoid Going Further Into Debt
The first thing you absolutely must do to reduce and ultimately eliminate your debt is to stop creating more debt. While this might seem obvious, it’s easier said than done.
If you keep adding to your debt while you’re trying to pay it off, you won’t make any progress. When you stop creating more debt, you gain some peace of mind that your debt isn’t getting worse.
Things you can do to make sure you don’t take on more debt include freezing your credit and cutting up your credit cards.
2. Create a Budget
When you’re trying to get out of debt, it’s important that you have a clear picture of where all your money is going.
By creating a budget, you can decide where spending can be cut. For example, many people are paying for monthly subscription services they don’t even know they have and aren’t using.
When you create a budget, you will gain a new perspective on your spending habits. When you cut spending in one area, you can apply that extra cash to your debt payments.
3. Use the Snowball Method
One of the hardest parts of working to pay off your debts is feeling like you aren’t making any progress. If you are trying to juggle making extra payments on multiple debts each month, you probably won’t see significant progress.
This can make it hard to stick to your budget and stay motivated. Feeling like you will never get out of debt is a miserable situation.
An easy way to quickly see progress by eliminating debts one by one is the snowball method. Using this method, you put all your extra cash on your smallest debt and just make the minimum payments on the rest.
Once you pay off the smallest debt, you move onto the next smallest one. As you can imagine, you’ll feel more motivated when you actually watch your debts be eliminated one at a time.
4. Or the Avalanche Method
The avalanche method is very similar to the snowball method. The only difference is that instead of focusing on your smallest debt, you focus on your debt with the highest interest rate.
Put all your extra cash towards this debt each month while continuing to make the minimum payments on the rest. Once this debt is paid down, move on to the debt with the next highest interest rate.
The advantage of using the avalanche method over the snowball method is that you will save money on interest, especially if your debts with high interest rates are large.
5. Lower Your Interest Rate
The cost of credit is one of the worst things about being in debt. It can be frustrating when you feel like all of your money is going towards interest.
Did you know that there are things you can do to lower your interest rate? It’s always worth the effort to be upfront with your lender. Simply ask if they are willing to lower your interest rate.
If this doesn’t work, consider a balance transfer to a card with a lower or zero percent interest rate. The catch here can come in the form of fees and a limited period of time before interest is charged.
If you think you can pay off your debt in a short period of time, this method might work for you.
6. Increase Your Income
When all else fails and you can’t cut any more from your budget, you can always increase your income.
While it’s not likely that your income at your current job will increase substantially, there are other options. Consider getting a part-time job or earning extra cash on the side.
Chances are, you have some type of talent that can earn you some extra cash. If not, consider selling stuff you aren’t using online.
7. Consolidate Your Debt
If you have a number of debts, you should consider consolidating them with a personal loan or a line of credit.
With this method, you use your new loan to pay off your other debts. The advantage is that you will only have to make one monthly payment going forwards.
In most cases, your monthly payment will actually be less than you were paying before. This is a good option for getting your debt under control and making your monthly payments more manageable.
Want to Have Zero Debts?
Are you overwhelmed by your monthly debt payments?
Do you dream of the day you can be debt-free?
If you want to eliminate your debt and ultimately have zero debts, we are here to help. We offer debt solutions tailored to your personal financial situation.
We can help you consolidate your debts with the goal of getting you debt-free. Take control of your financial health today by clicking here to get started and learn more about your debt consolidation options.