Most people have some sort of debt. It is an easy thing to get into, after all. The trouble is, getting out of debt is a lot more complicated. While debt is a useful tool that can allow you to realize your long-term financial goals, it has the power to destroy them too.
Whether you’re carrying on a small balance on your credit card every month or have mountains of bills to pay, debt can make it impossible to get ahead. Although it can take a while to clear your debts, there are ways to speed up the process. With that in mind, here are seven killer ways to get out of debt faster.
1. Pay More Every Month
Nowhere does it say that you should only make the minimum payments on your debts each month. It is possible to pay more, and most would advise that you do. If you only pay the minimum, it will take longer and cost more for you to pay off your loans.
Paying just a little bit extra will speed up the process and reduce the amount of interest that you have to pay during the life of each loan. Just make sure that you won’t be charged a fee for clearing your debts early.
2. Live A Simpler Life
Many people can’t make a higher payment each month, as they struggle to pay even the minimum. If this sounds familiar, then adopting a simpler lifestyle may be the best solution. Take the time to go through your budget and eliminate as many unnecessary costs as you can.
Small expenses, like takeout coffees and the occasional pack of cigarettes, might not damage your finances alone, but they do add up. Cutting out these costs, therefore, will free up a lot of money.
3. Start A Side Hustle
Although eliminating costs is helpful, it will only ever get you so far. When you reach the limit, you should look for ways to bring more money into the household. Everyone has a skill or two that they could monetize, so consider where your passions lie and start your own side hustle.
Those that love kids, for example, could offer childcare services, while those that play an instrument could give lessons. Alternatively, you could ask for more hours or look for weekend work.
4. Lower Those Interest Rates
When borrowing money, you very rarely have to pay back the amount that was lent to you. Instead, you pay much more, because of the interest added on top. When you have lots of loans, all with high-interest rates, it significantly increases the amount that you owe. Consolidating these debts, using another loan, such as Sweden’s “samla lån”, can reduce your interest overall.
If you have a good history of making your payments, you could negotiate a lower rate instead.
5. Use Any Cash Windfalls
Now and then, most of us find ourselves with a little extra money. This might come as a bonus from work or inheritance from a loved one. As tempting as it can be to spend this money on a shopping trip or a day out with the family, you should put it towards your debts.
While a splurge would offer temporary satisfaction, clearing your debts will improve your life in the long-run. If you haven’t got a windfall, then you could create your own by selling your unwanted belongings.
6. Give Yourself A Reward
Clearing debt means having to make a few lifestyle changes. However, you shouldn’t have to live on the bare minimum each month. If you ban yourself from all sorts of treats, it will only make you want them more.
This could cause you to slash out, potentially putting you even further into debt. While there are certain costs that you should eliminate from your budget, like unhealthy habits, you are allowed a few non-essentials. Think of these as rewards for all your hard work.
7. Prepare For An Emergency
Whether it be a flood in your home or the car breaking down, emergencies tend to come with unexpected costs. The problem with this is that you won’t have planned for these expenses in your budget.
Building an emergency fund would mean that you don’t have to take on any more debt to cover these costs. You should also purchase insurance to cover a range of things, from your pets to your property. You might not ever need it, but it’s better to be safe than sorry.
Getting out of debt is tricky, but, with the advice above, you can do so much quicker.