If you are like most Americans, you are in debt. Debt can become crippling if your spending is left unchecked. So, how do you get out of debt and maintain your sanity in the process?
I have compiled this list of tips to help you pay off your debt in record time. These tips will give you financial freedom and take a huge weight off your shoulders!
How to Get Out of Debt
1. Stop Spending
If you can’t pay cash, you can’t afford it, plain and simple. You can’t get out of debt unless you stop accruing it. Freeze your credit cards in blocks of ice, cut all but one up, or lock them away. Do what you need to do in order to remove temptation.
2. Establish an Emergency Fund
You need to set aside $1000 to cover unexpected expenses. If you don’t have an emergency fund before you tackle debt, you may need to use your credit cards to pay for those expenses.
3. Create a Budget
If you don’t know what a budget is, check out “What is a Budget? and Why You Need One!”, then return to this post. Once you have created a budget, you will know how much money you have available to pay off debt!
If you don’t have extra money to funnel toward debt, make more money by using the ideas on my Make More Money pin board on Pinterest! These side hustles and money making ideas will help you earn more money so you can get out of debt even faster!
Create a monthly budget for paying off debt and funnel that amount into paying off a single credit card or loan at a time! Once you pay off one card, keep the same budget amount, but focus on the next until you are debt free
4. Choose a Target
Choose the account that you owe the least amount of money on. Pay this account off. Use any extra money you earn to pay extra. You don’t have to wait until the payment is do. Five to ten dollars here and there adds up!
Once this account is paid off, move on to the next one you owe the least on. Before you know it, all of your debt will be eliminated.
5. Reward Yourself
When one debt is paid off, celebrate in some small way. This will give you incentive to pay off each debt and a short break from the stress at the same time. Don’t spend much, only $20 to $50, then get back on track.
Living Debt Free
Once your accounts are paid off, you need to prevent accruing debt. Close all accounts, but one. Choose a credit card that has the highest casback rewards! If you use this card for travel or any necessary expense, make sure you have money set aside before you buy.
Pay off the balance in full every month with the money you set aside. If you will be reimbursed, it is best to set money to the side to avoid interest charges.
Earn Cash Back
The beauty of a cash back rewards card is that every month you can earn cash back on bills and other expenses you set money aside for. I have a friend who earns $200 a month is cash back and never pays a dime of interest.
A Word of Caution
If you cannot trust yourself to pay off the balance every month, don’t attempt to earn cash back rewards. It just isn’t worth the risk of going into debt again.
Congratulations! You are Debt Free!
These tips will help you get out of debt fast and live a happy, comfortable life without worry. Now is time to start delegating more money to savings! Rework your budget to include more savings and freedom from debt.
Stay out of debt by saving money for expenses, vacations, holidays, and other expenses that have thrown you off in the past.
A Penny for Your Thoughts?
Have you paid off a significant amount of debt? If so, how did you do it? Share your experience with others in the comments below.