Get Ahold of Your Finances and Pay Back Debt
How to Get Out of Debt as Soon as Possible
Debt is a commonplace problem, and one that’s not easily overcome. Once you find yourself in debt to a lender, you’re at risk of sinking deeper. Between high interest rates, deadlines, and carrying on a comfortable lifestyle, you may feel like there’s not enough money to keep afloat, or to know how to get out of debt.
Luckily, there are several options available to those who suffer from debt, but how to get out of debt and how to reduce debt quickly are different issues. Learn some simple ways to whittle away at your debt every day, along with some more extreme yet effective approaches to become debt-free relatively fast.
Evaluate and Attack your Debt
Before you can develop a successful plan to deal with debt, you need to understand your spending habits and how they can be altered. Write down everything you spend money on, and that means everything. From monthly bills to your favorite afternoon snack, you’ll be better able to apply reasonable limits to all types of purchases once you can account for every cent.
After you’ve tracked your purchases for a month or so, you should be able to determine how much you’re spending in relation to how much you’re taking in, and then identify expenses that can be eliminated. After you set up a clear and sustainable budget, stop impulse buying and only use cash for purchases to avoid feeding the cycle of credit card debt. In fact, many people find that using envelopes or jars to hold a monthly “allowance” for each expense will keep them within their budget. Once the money is gone, you can’t spend on that particular item until next month’s allowance is available.
Effective Ways to Eliminate Debt
There are numerous ways to get rid of some of your debt, but you’ll have to decide which are best for you. It’s possible to become debt-free relatively quickly, but are you willing to make the necessary sacrifices? One excellent way to pay off debt is to use your assets wisely—if you can free up the equity in your house or car, you can put a big dent in your debt. Learn how to refinance your home to get a more affordable interest rate, or sell your car and buy a less expensive model to use some cash toward your debts.
Another way to tackle debt is to use your more personal assets: your own time and energy. If you can afford the hours and you have the drive, consider taking a second job that will give you that little bit extra to get ahead in your payments. But be careful with your spending—you took the job to get rid of debt, so use that entire income for making your debt payments.
One of the most popular ways to regain financial stability is to consolidate debt with one or two large loans, which will let you pay off all your individual debts. Not only is it much easier to track one or two loan payments than a flurry of smaller ones, a consolidated loan will generally require a smaller payment and bring a lower interest rate than you were paying on the individual debts.