You’ve had it up to here with all that debt and need a way out. But the array of options is dizzying and you’re unsure where to start. Don’t worry, we understand, and we’ve got you covered. Here’s how to get out of debt quickly.
Pad Your Payments
Avoid paying the bare minimum on your credit cards or line of credit. Because the bulk of those minimum payments will be applied to interest fees rather than your principal, it can take a long time to erase your balance.
Need proof? Here’s a financial calculator you can use to see what your savings will look like if you sneak in as many extra bucks as possible whenever you pay your bills. Even a small added amount, if you do it every month, will make a difference before long.
Spend Less And Only What You Have
It’s too easy to break out the credit card when you see something you like. You tell yourself you’ll pay the debt off “next month,” but if you have a habit of buying nearly everything you want, there’s a decent chance you’ll put something else on that card before you make the payment.
The Credit Counseling Society (CCS) encourages consumers to purchase only when they have the money in hand. This is particularly true when you’re trying to get out of debt quickly. Even a short-term sacrifice can help lower your debt load. Once your debt is paid off, you will be used to living under your means, and you can use the cash you’re saving on other financial priorities.
Reach for Cash First
Paying with cash instead of credit is another way to spend less. According to the CCS, McDonald’s has found customers buy 56% more food and drinks when they pay with plastic. What’s more, research has shown people shell out 100% more when buying event tickets or from vending machines when they use credit.
Overall, people spend at least 15% more than they would ordinarily on everything they buy with credit. Moral of the story? Use cash. And, if you do occasionally buy with credit, discontinue doing so until you’ve reached your debt goals.
Pay Your Priciest Debt First
It’s simple: Focus on paying off the debt on which you pay the most interest. That’s where your extra payments should go. Once you’ve knocked out that debt, add the money you were paying on it to the payment you’ve been making on the next most expensive obligation until it’s cleared.
“Lather, rinse and repeat” until you’ve washed them all away.
It’s very tempting to fork over more than you can afford to experience the temporary joys of a spanking-new car. Resist it. Go with a quality used vehicle instead to save money and help you get out of debt faster?
Use the money you save to pay off your debt.
If you absolutely must buy a new car, get something dependable, capable of returning good fuel economy and with a reputation for longevity so you can keep it for 15 years.
This way you’ll stay out of debt.
If your family has two vehicles, consider getting rid of one until you’ve lowered your debt. After all, the average vehicle owner spends more than $9,000 annually to own and operate their ride.
Now you have some solid tips on how to get out of debt quickly. The more of them you put into practice, the faster you can be debt-free.