Debt can be overwhelming and affects us in more ways than one. It makes you anxious. And it takes a toll on your emotional well-being. It gives you sleepless nights and impairs your everyday life. Not only that, but it also has a ripple effect on your financial health and quickly damages your credit score. As a result, when you’re in debt there’s a compelling urge to take control and work your way to financial freedom. But how can you make this happen? What strategies can you employ? What are the easiest and most effective ways to pay off debt? If these questions plague your mind, here are some approaches you should consider.
How to Get Out of Debt Faster
- Value every dollar. Create a financial plan and try to allocate 20%-30% every month for savings and debt paydown. Remember, your goal is to pay off debts faster. Try to minimize unwanted expenses and set aside as much as possible for debt repayment. Putting these extra dollars towards debt repayment will go a long way in eliminating debt faster and will save you a considerable amount of money on interest.
- Try debt snowballing. This method can build momentum and help you achieve your goals faster. List out all your debts from the smallest one to the largest. Try to put your extra funds into the smallest balance first and continue to make minimum payments on the larger ones. Once the smallest debt is paid off you can put extra money into the next smallest balance until that is paid off. This will gradually help you eliminate debts one by one, thereby freeing up funds for the larger ones.
- Pay more than the minimum. When you’re only making minimum payments each month, you’re only prolonging debt repayment. So make a strong commitment and strive to pay more than the minimum. Instead of monthly payments, try to pay every week. Also, set aside bonuses and extra cash from your monthly budget towards debt repayment. Avoid the temptation to spend your bonus money on a luxury purchase or a vacation. This can come a long way in making you debt-free much sooner.
- Stop credit card spending. The only way to stop your debt from accumulating is to stop using your credit cards until your balances are paid off. This can be especially hard when you have unforeseen expenses and zero savings. But this is the only way to make sure your debt doesn’t increase in size.
- Consider credit card refinancing. When debts become extremely burdensome, it might be time to opt for refinancing. This can help you combine all your high-interest debts into one card or loan that comes with a much lower interest rate. This makes it easier to manage your payments and helps you eliminate debt faster.
Most importantly, be prepared to take control. Getting out of debt is not going to be easy. It may take many sacrifices and a whole lot of dedication and hard work to break free from the debt cycle. But remember that a debt-free future is not out of your reach. With proper financial planning and strong commitment, you may be able to eliminate debts faster than you think.