5 Best Practices For Getting Out Of Debt Quick And Easily
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Getting out of debt can be a daunting task, but with the right strategies, it’s definitely possible. In this article, we’ll be discussing five of the best practices for getting out of debt quickly and easily.
Why Is Getting Debt-Free So Important?
Debt is a trap. It catches people in a cycle of borrowing to pay off old debts, only to find themselves owing even more. According to a study by Bankrate.com, many people are living paycheck to paycheck and find it hard to keep up with bills. In uncertain economic times like these, it is important have a plan in place so that you can stay safe and secure financially.
Debt is a leading cause of financial stress, and it can be tough to break free. Fortunately, there are several strategies you can use to reduce your debt and improve your financial situation.
More Financial Security
Debt can be a source of financial insecurity. If you have no debt, your money is available to you to spend on things that are important to you, like saving for a down payment on a house or car, or starting your own business.
Debt can also lead to monthly payments that take up valuable income and prevent you from spending the extra money on things that are more important in your life. By making smart investments and avoiding debt, you can build wealth over time.
Now that you have a good reason to get out of debt, how are you going to do it? You wrote down your plans and goals, remember? If you do this, you’re more likely to succeed. Let’s get started!
What Steps Can Be Taken To Get Out of Debt Quick?
Review Your Budget
One of the best ways to get out of debt quickly is to drastically reduce your expenses. This means cutting back on your spending on unnecessary items and focusing on those that will help you reach your financial goals.
To save money, reduce your spending on items that don’t directly contribute to your well-being or survival. This may include things like cable TV, unnecessary vacations, and expensive cosmetics.
I personally love using Mint for tracking our budget and expenses. It helps you identify where your money is going so you can figure out how to cut back on expenses.
While cutting back is important, it’s vital to enjoy your life so consider keeping an extra bit of money set aside for your favorite activity. If you cut cable, consider signing up for a month of Apple TV or Netflix, then canceling for a month.
List Your Debts
Make a list of everything you owe. Every single one of them! If it’s a $5 borrowed lunch from a coworker, $100 from your dad, or a $12, 341 car loan, it goes on the list from lowest to highest amount.
Paying off your smallest debt first will give you a sense of immediate relief. Once that is paid off, use the increased money you now have to pay off your next largest amount. This process is called “snowballing,” and it can be very effective.
The snowball gets bigger as it rolls along. In the same way, more money that’s freed up will allow you to bank more funds for future use on other debts as well.
Make A Plan
Repeat this to yourself: I plan to pay off my debts in a reasonable amount of time. I will set aside money each month to help me towards this goal, and if I reach certain milestones or pay off all my debt within a certain period of time, I’ll celebrate.
Don’t get too crazy, though! When you hit a goal, treat your family with something small you all enjoy for a short period of time. This will help keep the long-term goal in mind and make them more motivated to help you reach it. Try to avoid using credit cards for everyday expenses.
Look For Extra Money
There are many ways to add money to your snowball and help it grow, so you can pay off your debt sooner. You could have a yard sale, offload items on Facebook Marketplace, pick up a side gig like Uber or Doordash, deliver pizza, or freelance on Upwork. Keep working hard, and don’t let anything stop you from achieving your goals.
Increase Your Credit Score
Reducing your balance-to-limit ratio on your credit cards can increase your credit score. Your credit utilization should be no more than 30%, but the lower, the better! Paying off your cards each month is ideal.
Credit Karma is a great, free tool to monitor and track your credit score. It provides quick access to your credit score, updated regularly, and lets you see how you’re doing.
If you are looking to get out of debt quickly and easily, these five practices are a great place to start. What strategies have you tried in the past that have worked well for you? Share with us below!
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