Paying Off Debt
Debt is something most people deal with at some point in life. The personal finance site WalletHub conducted a study and found the average American household carried $8,033 in credit card debt in 2016, and the trend line was going up, not down. Throw in student loans, unpaid medical bills, utility bills, car payments, mortgage payments and other sources of debt, and it’s easy to see how people become paralyzed by their finances.
Getting out of debt is difficult. If you could magically get a different job with a significantly higher salary, you probably would have done so already. Sadly, there’s no quick fix to getting out of debt. But it is possible with patience and discipline. Read on for five important tips that can help you pay off debt.
1. Make a Budget
Making a budget might sound like a waste of time. If you’re spending all your extra money on bills, then why bother with budgeting? A budget won’t magically free up money, but it cements your monthly spending plan and will help keep you on track when funding does eventually become available.
2. Look for Contract or Freelance Work
Paying off debt costs money—and it’s probably money you don’t already have. Take advantage of contract opportunities such as Uber, or go online and search sites like Craigslist for paid freelance opportunities. Everything helps. You will need to work as hard as you can until you’ve paid off at least one of your debts.
3. Start Off Small
Pay down your smallest debt first. Then, move on to the next-smallest debt, and then the next-smallest, and so forth. With each small debt you pay off—whether it’s a utility bill or a medical bill—you’ll have a bit of extra money to roll into other bills.
4. Monitor Your Debit and Credit Accounts
It’s easy to spend small amounts of money on plastic. A few coffees here, a few snacks there, and suddenly you’ve spent a considerable amount that could have made a bigger dent in a bill. Keep an eye on your accounts so you remain aware of your habits.
5. Invest in Cheap Entertainment
You must find ways to have affordable fun while paying off your debts. Board games and online games are cheap sources of entertainment, or you can take up a fitness habit like running, hiking or biking. If you already have cable, perhaps invite friends over for regular potlucks and movie nights. Be creative and find ways to have fun that don’t cost lots of money.
Paying off debt isn’t fun, but it’s necessary. It’s also possible, no matter how far in the hole you feel you might be. Most people are never completely free of debt, but some debts—such as car payments and mortgages—aren’t as burdensome as massive credit card debts. Just be patient, keep at it and always remember to live within your means.