Wondering how to get rid of debt quickly? This blog post will go over 8 ways to help you get rid of your debt quickly!
Life can go by and you may find yourself spending more beyond your means and now you’re stuck with a whole bunch of bad debt. Here are 8 tips to get rid of your extra debt quickly.
1. Create a budget
Know where you’re at financially and start wherever you are. If you’re unsure of where to start, try searching and downloading a budgeting app. It really helps to see all the numbers written out and itemized. Once you know what you earn and what you spend each month, any money left over can be used to pay off debt.
2. Change spending habits in the short-term
Start using cash or Interac and put away the credit cards. That way you are spending only money you have and not borrowing. Now that you’ve controlled your credit card debt, it’ll be easier to try and pay it down. At first, you may pay just the minimum amount owed to avoid extra fees, but if you can, be determined to pay extra to get that debt down faster.
Look at your other expenses on your statements and see where you can trim. You can review your grocery budget; cancel subscriptions, and possibly put memberships on hold.
3. Find, or negotiate, a lower interest rate
Credit card interest rates can be really high. Sometimes, if your payments have been current, creditors may be willing to reduce the rate if you simply ask. Credit card companies want your business and there can be short term promotions where you can transfer your balance to another credit card company at a substantially lower rate for 6-12 months
4. Get a game plan to pay off multiple cards and debts
If you’re still stuck with high-interest cards, list them in order of rates from the highest to the lowest. Now pay more aggressively on the highest-interest cards first, while paying only the minimum on the other cards. When you’ve paid off one, work on the next one down.
5. Consolidate debt
What you can consider is to apply for a loan at a lower interest rate and use it to pay off your higher interest rate debt. This doesn’t actually reduce debt but it can make monthly payments easier and you’ll save money on interest in the long run.
6. Refinance Your Mortgage
Mortgage rates are much lower than consolidation loans and the increase can be amortized over the life of the mortgage. Again, this doesn’t reduce your debt but it’ll help with your cash flow and you’ll pay off the debt faster due to the lower interest.
7. Use your work bonus
If you receive one, consider using it toward paying off debt rather than spending it on a vacation or other luxury purchases. I understand you’ve worked hard to get it but you’ll be less stressed in the long run.
8. Life insurance loan
If you’ve been paying into a life insurance policy that has built up a cash value, check to see how much cash surrender value is available to you. Don’t cancel your policy but companies may let you borrow the cash that’s been accumulated at a much lower rate.