Many people would love to pay down their debt or get rid of it altogether, but they aren’t quite sure of the best way to do it. There really isn’t any one “best way” that works perfectly for everyone. So, here are some suggestions to get you started. The more of these that you can apply, the faster you will get out of debt.
Pay Off Your Most Expensive Debts First
One of the smartest strategies for getting out of debt is to make minimum payments on all your debts and credit cards except for one. Choose the one debt that is charging you the most interest and focus all your extra payments on paying that one off first. Once your first, most expensive debt is paid off, take all that money that you were paying on that first debt and focus it on the next most expensive debt. Continue this method as you pay down each of your debts, and you will be left with your least expensive debt to pay down last.
Track Your Finances Monthly
You must be intentional about your finances. You can’t just spend money that is unaccounted for and then wonder at the end of the month where all your money went. The best thing to do is to create a budget that tracks your income on the top and your expenses on the bottom. Then subtract your total expenses from your total income and this will show you if you have either a surplus or a deficit. A surplus means that you have money left over to use to pay down your debt.
Put All Extra Cash Toward Paying Off Your Debt
This is one of the steps that can be very easily overlooked. When you get a bonus or a tax refund, it can be tempting to want to go out and celebrate. However, if you really want to get out of debt and make progress toward your financial goals, you need to create the discipline of putting any extra cash that you get towards paying down your debt. This is key to getting out of debt quickly since it is these windfalls of cash that you didn’t normally expect that give you the progress you need to build momentum.
Increase Your Income
This is the most important step that most people overlook. You need to find as many ways as possible to make extra money on the side so that you can pay off your debt quickly. Apply for a second job at a pizza joint, serve at a restaurant, deliver papers, do anything you can to bring in more income. There are many other ways in which you can increase the money you bring in.
Enjoy the Journey
Listen, if you can’t learn to enjoy the ride out of debt, then you won’t appreciate the destination of being utterly and completely debt free. So, stop beating yourself up over all your debt. Live life, enjoy your kids, have fun, make beautiful memories. We got one shot at this thing called life, so we might as well enjoy it while we can.