55% of Americans with credit cards have debt.
With the cost of credit, it can seem nearly impossible to get out of debt. Juggling multiple monthly debt payments can be seriously discouraging.
Maybe you’ve tried to make extra payments on your debts but just aren’t seeing any movement. When it comes to getting out of debt, thinking out of the box can come in handy.
We’ve put together a list of some of the best creative ways to pay off debt to get you started. Keep reading to learn more about how you can make getting out of debt easy and maybe even a little fun.
The Snowball Method and the Avalanche Method
When you’re in serious debt, you probably have to make payments on multiple debts at the same time. Many people try to get out of debt by paying a little extra on all of these debts. Not only can this be hard and confusing, but it can make it seem like you aren’t making any progress.
This can hurt your motivation. While you absolutely have to make at least the minimum payment on each debt, there is a creative way to see progress more quickly.
The snowball method involves paying extra each month on just one of your debts after making the minimum payments on all of them. There are two different ways to choose the debt you want to focus on first.
First, you can put your extra cash towards the debt that has the smallest balance. This is a great way to quickly see a debt eliminated. Then, you can use the money that used to go towards that monthly payment and apply it towards the debt with the next smallest balance.
With this method, the amount you can apply each month to your smallest debt will keep growing and you’ll see your debts disappearing right before your eyes.
The other option is called the avalanche method. Using this method, you’ll put your extra cash towards your debt with the highest interest rates.
Once a debt is eliminated, you will redirect the monthly payment to the debt with the next highest interest rate. This method can take longer than the snowball method, especially if your high interest debts have larger balances. However, you can save money on interest this way.
Increase Your Income with a Side Hustle
If your debt to income ratio is keeping you from being able to afford your monthly payments, it only makes sense to increase your income.
Even if you’ve made every budget cut you can, adding just a little more cash to the equation in addition to using debt lowering strategies can yield quick results. After all, the more you can pay towards your debts each month, the faster you’ll be out of debt.
There are many ways to make extra money in your spare time.
Lower Your Interest Rate
Interest is the worst part of being in debt. It can be challenging to find the motivation to make payments when you’re barely touching the principal amount.
Most people don’t realize that there are things you can do to lower your interest payments. For one, you can consolidate your debt by taking out a personal loan with a lower interest rate.
You can pay off your creditors with this loan and then only have to worry about making one monthly payment. Your monthly payment will probably be lower and your overall costs will be reduced.
You might also consider transferring your credit card debt to a balance transfer card. These usually have a 0% promotional rate. This is great as long as you can repay the balance before the promotional rate ends and any fees are charged.
Finally, you could always try directly asking your lender to lower your rate.
Claim Cash Back Rewards
Most credit cards offer cash back and credit card rewards. The more debt you’ve accumulated, the more rewards you’ll have earned.
Be sure to claim your rewards every month. Use the cash back to pay off the debt you’re working on. You can even put the cash back on the card itself.
If your card offers rewards points that you can redeem for other merchandise, you can choose items that you would have bought anyway, like gift cards to grocery stores or plane tickets.
Become a Couponer
We’ve all seen the grocery shoppers who have a coupon for everything. If you’re willing to put in the work of clipping coupons, you can save significant amounts of money on groceries.
These days, many coupons are digital and require even less effort. You can probably find a coupon or promo code for most things you buy.
A creative way to reduce your debt is to apply the money you saved using coupons to the debt you’re working on. Link your debts directly to your bank account and transfer over what’s left of your grocery budget after you get what you need.
You can learn more about couponing here.
Looking for More Creative Ways to Pay Off Debt?
These are just a few of the many creative ways to pay off debt. While it can be fun to get creative with your debt repayment plan, sometimes the tried and true methods really are the best.
If you are juggling making payments on multiple debts each month, debt consolidation may be right for you. We can help you make the best choice for your unique financial situation.
Click here to see what debt solutions are available to you.