Eight Ways You Can Get Out of Debt on Your Own
|Published: 14th July 2019 21:46|
According to Experian, the average American has a credit card debt amounting to $6,354 and over $24,700 in car loans and other non-mortgage debt. In addition, student loan balance has hit an all-time high, with the average student graduating owing $34,144 in student loans.
Americans use credit to bridge their financial gaps, which means expenses outweigh their earnings. Indeed, according to a study conducted by Pew Research, over half of Americans fall into this category. With such statistics, you can see that an enormous number of people end up in debt.
Worse off is that many people choose not to confront their financial situation. However, sudden life changes prove to be the turning point. It could be a job loss or an emergency medical situation that the reality of how deep they are in debt finally hits home.
While this reality may seem impossible to get over due to the time and effort it takes, there are various strategies you can use to get out of debt fast.
1. Consider Snowballing
The snowball method is a great way of speeding up a debt payment. As the name suggests, this method works similarly to how a snowball gathers speed rolling down a mountain. The first step is to list all your debts starting from the smallest to the largest. This is the order you’ll use when repaying the debts.
If you come across any money, throw it at the smallest debt, but make sure to maintain minimum payments to all other loans taken from various services. After you’re through with the smallest debt, move on to the next- sized debt. You’ll do this until you clear all debts.
As you clear each balance, you’ll get a sense of victory, which is crucial for anyone trying to get out of debt on their own. In fact, this why the snowball method works well. Before you know it, you’ll be debt-free.
2. Pay More than the Minimum
Getting out of debt on your own requires more effort than what you’re already offering. A typical credit card debt of $15,000 with a 15% APR will take you no less than 13 years to clear if you make monthly payments of $625. This is quite a long time, which is why paying more than the minimum monthly installments will help you overcome the debt sooner. Apart from being debt-free in the shortest time possible, you’ll also avoid paying a lot of money in interest.
While this may be a great method of paying off any debt, it’s important to first understand the lender’s terms. Some lenders charge early payment fees. If they don’t, you can enlist the help of debt repayment apps such as Tally. These apps will help you track your progress during the repayment period.
3. Start a Side Hustle
Paying more than the minimum monthly installment is a perfect idea. However, if you’re on a tight budget, which means there’s no money to make the excess payments, where will the excess money come from?
Don’t panic if you’re in this situation. Starting a side job is your best bet. It’s easy, fast and convenient because you get to work on your own terms. If you have a day job, you can work on the side job at night. For instance, if you’re a programmer, you can leverage the skills for a tidy amount. In fact, it’s possible that you may earn more than your day job.
If you’re clueless about where to start, consider launching your job hunt on reputable platforms such as Upwork.com or TaskRabbit.com. These sites are flooded with opportunities like data entry, writing, babysitting, etc. Use the extra money you earn from the side job to pay off your debts.
4. Set Up a Garage Sale
Garage sales are common and are great ways of getting quick cash. However, before you can put your items on sale, it’s important to sort them out to find out which ones you don’t need. Chances are you have a ton of items you no longer need. Instead of letting them lie around, why not turn them into quick cash through a garage sale?
It’s cheap and easy to sell your unwanted items. Other methods include selling your belongings through an online reseller, a Facebook yard sale group, or a consignment shop.
5. Create a Budget (a tight one)
If you want to achieve a debt-free status fast, you must cut down on expenses. This is not just for the little expenses, it’s about the big ones that’ll hurt, too. This way, you’ll cut down on both major and minor expenses as much as you can.
This includes cutting eating out, cable television, and any other unnecessary spending. As a result, you’ll live on the bare minimum. Redirect the excess money toward repayment, which will allow you to clear your debts as fast as possible.
Keep in mind, the strict budget may be tough to follow due to sudden lifestyle changes. However, the good news is this is not a permanent situation. Once you are debt-free or closer to clearing your debt, you can include more spending.
6. Renegotiate Bills and Interest Rates on Credit Cards
You may have a credit card balance with a high-interest rate, which makes it almost impossible to clear your balance. If this is the case, consider calling your card issuer with the aim of renegotiating the interest rate.
Asking for a low-interest rate on your card is common for people trying to offset their balances. If you have a stellar credit history, chances are the card issuer may listen to you and lower the interest rate.
Apart from credit card interest, there are other bills you can negotiate or even eliminate altogether. Remember, the worst that can happen is getting a no. However, you won’t know what will happen if you don’t try.
If you’re not a good negotiator, seek the services of money management apps such as TrueBill. This app allows you to analyze your purchase history to locate repeating fees and forgotten subscriptions. Once you find them, you can eliminate them from your budget. In addition, the app can negotiate some bills on your behalf.
7. Go for a Balance Transfer
Again, the worst that can happen when negotiating for a low-interest rate is getting a no. If the card issuer turns you down, it’s time to consider a balance transfer. Balance transfers allow you to move what you owe on one card to another.
However, your aim is to move the card to a zero APR card. This will allow you to pay off the balance minus the interest. The catch is that you must pay off your balance within the stipulated period. Often, these are promotions last anywhere from 6 to 24 months.
In addition, you may want to check for balance transfer fees before moving what you owe. Typically, you may need to pay about 3% as the transfer fee. However, there are cards that don’t charge this fee.
8. Avoid Temptations
When on a critical financial journey such as getting to a debt-free status, you’ll encounter countless temptations along the way. But regardless of the type of temptation, it’s always important to remember the end goal – achieving a debt-free status. Falling into temptation means piling on more debt.
Therefore, it’s in your best interest to resist all temptations if you hope to pay off all debts as fast as possible. Besides, you can always go back to your lifestyle after paying off the debts.
Facing reality is crucial when trying to get out of debt. Without that, chances are you’ll continue living a life of owing. In addition, living from paycheck to paycheck isn’t the best way to enjoy life, especially with numerous debts waiting for monthly installments.
Regardless of the debt you’re in, it’s crucial to understand there’s a way out. It’s also important to understand that getting out of debt will not happen overnight.With your plan in place, you can use the strategies listed in this article to achieve a debt-free status. The