Statistics show that the average American household has $135,065 of debt. How much debt does your household currently have? How long will it take you to become debt-free? Do you have a plan to pay off your debt in the near future? While it can be a daunting task, many people are able to achieve this through having a clear plan and discipline to attack the challenge. Keep reading to learn about a few tips to climb out of debt quicker.
Take a Look at Your Spending
Where is the money going? This is the first question that you have to answer in order to know how to manage your money moving forward. Knowing what you are spending your money on will help you see why you are not making bigger payments toward paying down on your debt. You may find items that you were not aware that you were spending such a high amount on and can scale the spending down moving forward. It is important to write everything down so that you have a visual of your financial profile as of today.
Get to Know the Cost of Things
Many people who are in debt often experience a little bit of sticker shock when their credit card bill comes at the end of the month. They’re so used to paying for something, and not checking the price, that they’re caught off guard by the balance owed. Some things, however, simply can’t be avoided — but by budgeting for them properly, you can help make sure you’re not surprised by their cost.
Things like your insurance, your mortgage, your car payment, and medical care are essential. Not paying them can quickly land you in hot water, leading to harm to your physical or mental health, or even impact your ability to have a roof over your head or a ride to work. However, if you ask yourself questions like, “Am I getting the best price on my insurance rates?” and “How much does therapy cost?” can make sure you have money left over at the end of the month after you pay your important bills.
Cut Your Expenses
How often are you ordering food or eating out each week? Do you pay for a gym membership but never go? Once you have written down all of your expenses, take a look at the ones that you use the least and eliminate them. This is something that costs you no money to do but can save you money each month to put toward paying down your debt. It won’t take any additional income to practice this tip because it is money that you are already spending each month.
Earn More Money
One way to pay more toward your debt is to earn more. You may not have the option to ask or gain a raise at work but there are other ways to earn more income. One of these is to start a side hustle. The gig economy has exploded over the last few years, making it easier to jump into a side hustle and make money on nights and weekends when you aren’t at your full-time job.
Choosing one that fits your schedule and that you enjoy doing in your free time is key to not being burnt out quickly by the additional work. Another way to earn more money is to take inventory of items that you are not using and sell them. You may have valuable items and can generate a few hundred or even a few thousand dollars that can turn directly into a payment toward your current debt. A benefit of this is that you will have less clutter in your home as a result.
Define Your Mission
It is important to set clear goals and markers for your progress in this mission to pay off your debt. Saying you would like to be debt-free — and actually getting there — are very different things. You will have to make certain sacrifices and decisions that will be much easier to make when you have a clear definition of why you want to pay off your debt and a timeline in which you will achieve that goal.
The start of any climb starts with a single step. Getting started right away is something that you have control over right now. Write everything down and begin mapping out the direction that you are going to go. It will be easier for you to take action when you know the steps that you have to take in order to get there. So what are you waiting for? The sooner you start, the sooner you can start to live a life free from debt!