Debt is like a dark cloud.
Few things can cause more stress and anxiety than being in over your head financially. Fortunately, there are strategies you can use to manage (and crush) debt effectively.
Ready to plow into a debt pile? Here are 10 tried-and-true ways to start tackling debt today.
Create A (Realistic) Budget
Creating and sticking to a budget is an important step in managing money responsibly.
Doing this can help you prioritize your expenses, increase savings, and allocate your income like a pro.
Knowing how much money you have coming in each month, what payments need to be made, and how much money is left over will help you plan ahead and make reasoned decisions about where your money should go.
Cut Up Credit Cards
It can be tough to resist the temptation of using credit cards to make impulse purchases.
One of the best ways to avoid overspending and creating further debt is to act like your credit cards are not an option.
Removing the temptation embedded in credit cards can help you stop spending on unnecessary wants, which will only put you deeper in a financial hole and lead to greater financial regret. You can’t ever fully pay off debt if you keep adding to it.
Plus, if you can’t afford to pay something in cash, then you can’t afford it.
Double Up On Debt Payments
If possible, double up on your debt payments every month.
This not only helps you pay off your debts sooner, but it can also reduce the amount of interest you need to pay on your loans.
If you can manage to pay more than the minimum monthly amount, do so, and eventually lessen your financial stress overall.
Consider A Balance Transfer
While you need to be very aware of balance transfer fees, consider transferring your balance to a lower-interest credit card or lower-interest personal loan if it means cost-savings.
Not only can this move potentially save you money in the long run, but it can also simplify your monthly payments by consolidating your debts into one account.
Before making the switch, make sure to carefully research the terms and conditions of the new card to ensure it is the right fit for you.
With the right strategy in place, transferring your balance can be a smart financial move in your financial wellness journey towards a debt-free future.
Try The Snowball Method
The snowball method is a tried-and-true technique. It involves starting small and building momentum as you pay off debt.
Begin by focusing on the debt with the lowest balance, and make extra payments until it is paid off. Once that’s done, move to the next lowest balance.
Rinse and repeat.
By experiencing the satisfaction of paying off debts, you gain the motivation to stick with the plan, and you could end up paying off your debts faster than you ever thought possible.
Automate Your Payments
Managing your finances can be a daunting and time consuming task, but it doesn’t have to be.
The last thing you want is to miss a payment, incur a late fee, and allow for additional interest to accrue. Setting up simple automation systems ensures that you always pay on-time.
Not only is this safer and more secure than the manual process, but taking advantage of automation services can have the added advantage of providing helpful insights into where your money is actually going each month.
If you are serious about getting a better handle on your finances, automating pays off in spades.
Quit Mindless Spending
It is important to take a step back and reevaluate your spending habits to avoid money mistakes at all costs, or worse, going broke.
By cutting back on unnecessary expenses, you can not only save money, but also have a more intentional and fulfilling life.
Instead of buying material items that only bring temporary satisfaction, you can focus on long-term goals that your future self will be thankful for.
It cannot be overstated that making small changes to your spending habits can have a sizable impact on your overall financial wellness.
Seek Side Hustles
If you simply cannot spend less, the only solution is to earn more.
Finding a side hustle can be a great way to apply additional money exclusively to debt. From freelancing to pet sitting to selling handmade crafts, there are bottomless opportunities—many of which can be done working from home.
Not only will you be taking a step towards financial freedom, but you’ll also be learning new skills and propelling your professional growth.
Aim for side hustle ideas that have minimal to no startup costs and, who knows—with perseverance and passion, your side hustle could replace your 9-5 someday.
Unload Unused Items
Want to declutter your home and make some extra cash to apply to debt?
Then, it is time to consider selling unused clothing or furniture to make some extra cash. Not only will this help declutter your living space, but it is also an environmentally-friendly option as you are giving these items a second chance rather than allowing them to end up in a landfill.
Plus, someone else may be able to put your unused items to good use.
With a multitude of online marketplaces from Poshmark to AptDeco, it’s easier than ever to sell and ship items directly to buyers. Start sorting through your possessions and see what you can sell today.
Negotiate Lower Rates
If you are grappling with high credit card interest rates, negotiating a lower interest rate with your creditors can be a game-changer.
It’s not always easy, but it is definitely worth pursuing. Start by doing your research and figuring out the typical interest rates for your type of debt. Then, reach out to your creditors and explain your situation. Emphasize how important it is for you to manage your debt and make your payments on time.
If you have a good payment history, you might be able to convince your creditors to lower your interest rate. Remember, the worst they can say is no. If you don’t ask, you’ll never know. So take charge of your finances and start negotiating today.
Negotiating with credit card issuers may seem intimidating, but it could end up saving you substantial amounts of money in the long run.
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