How to Pay Off Debt Quickly
August 22, 2022
Use these tips to ready yourself to pay off debt quickly.
Have debt? You are not alone. From student loans and mortgages to credit cards and medical debt, America has debt. But what if you’re sick and tired of constantly owing money and paying high interest rates? Here are some tips to help you eliminate debt fast.
Establish Your Budget
The first step is a thorough understanding of where your money is going. Start with your after tax income, add in your expenses for housing, transportation, utilities, and food. Then keep adding expenses until you have a complete view. Don’t forget expenses that may not be monthly, like car or renters insurance. You’ll want to account for those too.
Now that you’ve got a clear picture of your spending, what can you eliminate? Do you have multiple subscription services? Could you dine out less often? You make the choices. One way to frame your expenses is to determine your after-tax hourly pay. Now look at your spending habits and ask yourself if you had to work that many hours to buy that item, would you do it? If not, that may be an expense you can reduce.
To successfully pay off debt quickly you need to stop taking on more debt. If you’re deep in credit card debt, this means you may need to let go of the cards for a while and re-acclimate to cash and debit.
Pay Off High-Interest Debt First
If you really want to pay off your debt quickly, pay off your highest-interest debt first. By slashing your high-interest debt first, you’ll make a bigger impact in your debt repayment and pay less money over the life of your loan. You may also look for a credit card consolidation loan with no pre-payment penalties. These loans may allow you to reduce your interest rate and put more money towards paying off debt instead of interest.
Get a Side Hustle
Aside from cutting back and spending less, you can also focus on the other side of the equation: earning more. Start by hustling outside of your main job to make extra cash and boost your yearly earnings. Chances are this job will pay less than your primary income, and that’s okay. You’re getting out of debt, ending the high interest payments, and soon you’ll be able to put that money into savings.
Live on a Bare Bones Budget
What sacrifices are you willing to make? Paying off debt isn’t an overnight process. You can speed up the process by living on a bare bones budget, but it’s not for everyone. A bare bones budget is one that focuses on essentials — i.e. everything you need to live. Do you really need television, to dine out, or an adult beverage? If you want to really get serious about paying off debt quickly, cut back on unnecessary expenses. Debt doesn’t have to be forever and a little sacrifice now can make a big difference later.
What Can You Do Today?
Write it down and tell a friend. Science shows us that people with specific goals are more likely to achieve them. It is possible to become debt free – it simply requires action, patience, and persistence. If you’re looking to pay off debt quickly, use these tips to get started and say goodbye to debt.