Escaping debt won’t come easy – you must adapt your spending habits, keep track of expenses and devise a debt payoff plan to achieve success.
An emergency fund is also a wise move and can help avoid turning to credit cards when times get difficult. Here are some suggestions on how you can start saving:.
1. Create a Budget
Create a budget to gain clarity of your income and expenditures, then seek ways to save money (even if it means forgoing night out or skipping Starbucks runs) in order to apply those additional dollars towards debt payoff.
Start by listing all of your debts from smallest to largest without regard for interest rate, then focus on paying off the smallest balance with extra funds while making minimum payments on others.
Consider using strategies like the debt snowball or debt avalanche to accelerate your payoff process. Also, incorporate regular tithing and giving into your budget as it feels good to give while also helping keep you focused on what really matters: getting rid of debt.
2. Reduce Unnecessary Expenses
As expenses can come up suddenly, unexpected costs will arise. A budget and smart spending decisions can help to reduce unnecessary expenditures so that extra cash can be put aside toward debt payoff.
Start shopping smarter by using online coupons and comparison websites to locate lower-priced items. Reduce unnecessary expenses by opting to dine in more often and cutting your night-out spending budget – these small savings add up over time, helping to pay down debt faster.
If you need extra motivation to stick with your budgeting plan, reading stories of real people who’ve overcome debt may provide extra inspiration. Furthermore, many nonprofit agencies offer free credit counseling with trained and certified counsellors available.
3. Pay More Than the Minimum
Repaying the minimum payments each month is important in maintaining good credit history and score; however, making minimum payments won’t help you get out of debt fast. Accelerating debt repayment through increasing monthly payments is the only surefire way of speeding up debt elimination.
Review your budget to determine how you can free up extra funds for debt repayment. Cutting back on expenses like entertainment and dining out could free up some cash that could go toward paying down your debts.
Other possible strategies for saving include shopping around for lower utilities, insurance and mortgage loan rates or additional sources of income such as starting a side hustle, accepting overtime work or asking for a raise.
4. Make Extra Payments
No matter your income level, anyone can successfully repay debt – all it takes is creating a plan and sticking to it. Make a budget and use debt repayment strategies like those provided by NerdWallet as tools for paying back debts faster. A professional credit counselor may also assist in developing such an approach to debt payoff.
Utilizing all of your extra funds towards paying down debt and saving is an excellent way to speed up the repayment of loans faster. This may require changing spending habits such as forgoing credit card swipes and borrowing money from friends.
Increase your income by starting a side hustle, working overtime, getting a raise or seeking promotion within your current company, selling stuff or decluttering to free up funds to put towards paying down debt.
5. Set Goals
Reducing debt requires adapting your lifestyle and cutting expenses, but it is achievable through hard work and determination.
An effective strategy for staying on track is setting clear goals. Brian Brandow found inspiration in his debt realization to establish a budget and cut expenses; ultimately becoming debt free after fifty months of repayment.
Create a get out of debt plan is the first step toward change, but having a backup plan should unexpected expenses arise is also critical. This might involve setting aside emergency savings accounts or finding ways to cut expenses (like seeking cheaper car insurance or joining group workouts like HIIT). That way, your finances remain protected throughout any potential financial issues and you remain on track towards becoming debt free!