Paying off debt can feel overwhelming. When you have a mountain of bills and no end in sight, it sometimes feels easier just to throw in the towel and give up. Whether you’re struggling under the weight of credit card debt, medical bills, or a too-high house payment, there is hope for a debt-free life. It’s important to be realistic and start with a good plan. You’ll want quick wins to help you stay motivated as well. Paying off debt can be so rewarding and frees up your income to be used for things you actually want to use it for. Whether you have dreams of fun vacations, saving up for retirement, or helping others, here’s how to pay off debt quickly.
Make a Budget
It sounds obvious to create a budget, but did you know that most people don’t have one? They pay for things as they come in and it feels like money just floats away. Put simply, a budget is a plan for how you’ll spend your money. Nothing more, nothing less. It’s a tool to help you see where your money goes each month. A good working budget accounts for your necessary expenses, your debts, your wants, and any extras that come up each month. You can use paper or apps for your budget planner.
Start by listing all your monthly bills. You’ll want to include your rent or mortgage, utilities, food, car expenses, insurances, etc. Next, you’ll want to list all your minimum payments for your debts. This can include credit cards, car payments, and medical bills. Then list your fun things. This can be your Starbucks runs or your Hulu subscription. Once you list everything, subtract it all from how much you make each month. What’s leftover — if there is anything — will be used to make extra payments on your debts. You get out of debt faster by paying more than the minimum payment.
Find Ways To Make More Money
Another way to chip away at your debt more quickly is to find ways to make more money. These can be from salary increases at work, taking on a freelance or side job, or just by selling extra stuff from around your home.
Salary increases
It can be tempting to increase your spending the instant you get a raise. Why not? You earned it, right? What if instead, you used that extra to pay off your debt more quickly? Take a big chunk of it and start funneling those resources toward your debt. You’ll be amazed at the progress you’ll make in a short amount of time.
Sell stuff
You could easily have $1000 worth of stuff to sell off in your home or more. Collect the things that you can put on Facebook Marketplace, Craigslist, or have a garage sale. Decluttering can help you earn extra cash and make your space feel less stressful.
Freelance
You probably have a skill that someone else needs. Look for side gigs using LinkedIn, referrals, or Facebook business groups. You may find a really great side gig that you can leverage to get out of debt.
Follow the Plan
Once you have a plan in place, it’s important to follow it. If you’re trying to decide which debts to pay off first, try this method. You’ll list your debts from biggest to smallest, regardless of interest rate. Pay extra on the SMALLEST one first. Why? To help you gain momentum. You want to feel like you are accomplishing something so that you’ll keep working on the plan. By focusing a lot of resources on the smaller bills first, you can easily get the momentum that you need. Once the smallest debt is paid off, just go up the list. Roll over all the money you were paying on the smallest and start paying off the second smallest.
Adjust the Plan
You won’t do this perfectly. But you can get out of debt. If you are still struggling, you can check other options like negotiation services. There will be bumps in the road, but make sure that you adjust the plan. As you go through the process of paying off debt, you’ll gain more confidence, and you’ll discover that it was never as hard as you thought it would be.
