Statistics indicate that in 2015, the average American household owed over $15,000 in credit card debt alone. Likewise, when you consider that the typical college graduate left school with over $35,000 in school loans, it’s easy to see why so many people are in need of a little creative financial planning. For many individuals in debt, the reality of the amount that they owe is so daunting that they simply choose not to do anything about it until they have to. And still others just get tired of the constant struggle of living paycheck to paycheck. No matter statement more accurately describes your situation, just know that it is possible to get out of debt and fast if you’re really willing to work at it.
Why You Need to Get Out of Debt
While some individuals go through their entire lives carrying some debt load, the reality is that you can get out of debt if you work at it. With effective planning, you can eliminate the debt that you currently have and avoid creating more, which will afford you a number of benefits, such as freeing up your household income, allowing you to invest in your retirement, reducing stress in your life, and more. Most people have dreams of a comfortable life, but few people will actually realize those dreams unless they do something about their debt.
How to Get Out of Debt Faster
There is certainly no easy way to improve your financial standing and reduce your debt load. It will take hard work and maybe even a little heartache; however, there are strategies that make paying off debt faster and even less painful. If you are ready to get out of debt, then consider applying these strategies:
- Pay more than the minimum.
One of the best ways to pay debt down sooner is by simply paying more than monthly payment. Doing so saves you interest as well as speeds up the payoff process. Be sure to check if your loan charges any prepayment penalties before you get started, though, to avoid further heartache.
- Snowball your debt payments.
An extension of paying more than the minimum monthly payment on your debts, the debt snowball method is an effective way to build even more momentum to paying down what you owe. You’ll want to begin by listing all of your debts from smallest to largest and then begin throwing all of your extra funds at the smallest balance first while you are making minimum payments on your larger loans. Once the smallest balance is paid off, begin applying the money toward the next smallest debt and so on. You’ll gain some traction by paying off our smaller debts and have more to apply to your larger loans.
- Get another job.
You’ll obviously be able to pay off debt faster if you have more money coming in, so consider picking up a side hustle to create a little extra cash flow. Almost everyone has a skill that can be monetized, whether it is mowing yards, tutoring, cleaning houses, babysitting, or even being a virtual assistant.
- Work on the budget.
If you’re really focused on paying your debt down faster, then take some time to work on your budget and cut your expenses as much as you can. Live on as little as possible by cutting out any non-necessities, and use the extra to pay off debt.
- Sell what you don’t need.
Another great way to generate a little extra cash flow is to sell the extra “stuff” you have lying around. A yard sole is a great way to get rid of a few unwanted things, but you can also try options such as Craigslist and eBay.
It’s easy to continue living in debt; however, when disaster strikes, you’ll have to face the hard reality. Instead, why not start improving your situation now so that when you are faced with a difficult situation you are ready? Use these strategies to begin to develop an effective debt payoff plan today.