Tips to Help you Reduce or Eliminate Debt
Debt can feel overwhelming. If you have a large amount of debt, it’s often not just difficult to stay on top of your payments, but it also becomes tough to live the rest of your life. People who are worried about debt tend to have problems focusing eating well, exercising, sleeping, socializing, and doing many other activities. Debt can take over every aspect of your life, becoming all that you think about.
This situation can feel very hopeless. However, the good news is that there are things you can do to resolve your debt issues. Here are some tips that may help you eliminate debt.
Adjust your Budget
One of the most important steps to reducing debt is adjusting your budget. Look for places you can cut. It may be difficult to find areas where you can reduce your spending, but if you want to eliminate debt, you may have to make some sacrifices.
To start, look at where your money is going. If you’ve been tracking your spending, check out your spending records. If you haven’t, look at your credit card or bank statements. Are there any expenses that can be reduced?
For example, you may want to cut down on how often you order takeout or adjust how much you spend on clothing. Don’t forget to look at recurring expenses and subscriptions as well. If you have a monthly cable or cell phone bill, can you reduce this cost at all? Sometimes it helps to call the provider and ask them if there is a less expensive plan available. When it comes to subscription services like movie and music streaming sites, review how much you’re spending and compare this to how often you use the service. There’s a chance that you’re paying for things you don’t use.
Use a Strategy
Paying down debt is a difficult challenge, and for this challenge you’ll need a strategy. One of the most effective ways to eliminate debt is to focus your efforts on the debt that is costing you the most each month. For many people, this will be the credit card debt. If you have several credit cards, focus on the one that charges the highest interest rate.
If you can eliminate debt that costs a lot each month, you’ll save money over time and you can apply these savings to the rest of your debts.
Once you identify your most expensive debt, try to put as much towards paying it off as you can. This could mean making only the minimum required payments on your other debts (make sure you don’t miss any payments) and then putting as much money as possible on your most expensive debt.
Stop Adding on More Debt
It’s almost impossible to eliminate debt when you’re adding on new debt every month. If you have credit card debt, for example, it’s hard to pay down your bill if you’re using your credit card for the majority of your monthly purchases. Living on cash as much as possible keeps you from adding on new debt, which makes it easier to pay off your existing debt. Plus, when you’re paying with cash, you can’t spend more than you have, which helps improve your financial position since you can’t go into debt.
However, while you can’t go into negatives if you’re using only cash, it is possible to spend everything you have available before you’ve paid all your bills. This means you’ll need to track your purchases and stick to your budget closely so you don’t spend more than you can afford.
Find Ways to Get More Money
In some instances, no matter how you cut your budget or how careful you are with your spending, things still don’t balance and you may not be able to find a way to pay off your debts. In these cases, you may need to look into ways to earn more money.
Consider asking your employer if you can work some overtime or pick up some extra shifts if they’re available. You may want to take up a “side hustle” or find a way to earn some freelance or contract income. Another option is to sell some items you no longer use. Online auction sites and classified sites can be perfect for this, but you might find some success by holding a yard sale as well.
Whatever extra money you can generate can be applied to your debts. The sooner you manage to pay them off, the less you’ll spend in monthly interest costs, and the sooner you’ll be able to live debt free.