Crushing Debt: Proven Methods to Get Debt-Free Faster
Discover 10 proven methods that will help you get debt-free faster so you can finally achieve the financial freedom you deserve.
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Get Debt-Free Fast
Debt can be a heavy burden to carry, but there are proven methods to help you get debt-free faster. Taking care of the debt that you owe is a form of financial self-care. This will help you build a financially stable future and be able to invest in the trips and assets you want to experience in life. Whether you’re dealing with credit card debt, student loans, or other forms of debt, this guide will provide you with effective strategies to eliminate debt and achieve financial freedom.
Paying Off Debt as a Form of Self Care
Building a financially stable future for yourself and your family should be seen as a form of self-care. Are you tired of living paycheck to paycheck and scraping by to pay the bills? By taking care of your money you can relieve a lot of stress and take back control over your life, rather than having your finances controlling you.
There are several ways you can partake in financial self-care, but paying off all outstanding debt is one of the best ways to get started. Having debt can be a huge source of stress, so eliminating can be a relief. Let’s explore how you can get rid of your debt and take control of your finances.
1. Assess Your Debt Situation
The first step to getting debt-free faster is to assess your debt situation. This means taking a close look at all of your debts, including the amount owed, interest rates, and minimum payments. You can use a spreadsheet or online tool to organize your debts and create a plan for paying them off. It’s important, to be honest with yourself about your debt and commit to making changes to improve your financial situation.
2. Create a Budget and Stick to It
One of the most important steps in getting debt-free faster is creating a budget and sticking to it. This means tracking your income and expenses and making sure that your expenses don’t exceed your income. It may take some discipline and sacrifice, but sticking to a budget is essential for achieving financial freedom.
If you’ve never done a budget before, this family budget planning calculator is a simple way to get started. All you have to do is input your numbers and you get to see what you can work with. Very easy to use!
3. Prioritize Your Debts
Then, focus on paying off the debt with the highest interest rate first, while still making minimum payments on your other debts. This method, known as the debt avalanche method, can save you money in interest payments and help you become debt-free faster.
4. Snowball or Avalanche Method
The debt snowball method is great because it allows you to get clear of all of your debt. Write down each amount starting with the smallest amount of debt. Pay the minimum balance on all of your debts except the smallest one. With the smallest debt, throw more than the minimum balance. In fact, pay that small balance as quickly as possible. Once that’s paid off, move on to the next debt. Tackle that next amount as quickly as possible. As you continue down the list, like a snowball heading down a hill, the amount you’re able to pay off will get larger and larger with each debt you’ve eliminated.
On the other hand, the avalanche method focuses on paying off debts with the highest interest rates first, thereby minimizing the overall interest paid over time. Both methods have their merits, so choose the one that aligns best with your financial goals and preferences.
5. Increase Your Income
In order to make the debt disappear faster, you’ll need to pay down more than the minimum balance each month. If you have just enough to cover the minimum balance, this is a sign that you’ll need to find ways to increase your income. Start with your current job. When you’re giving 110% each day, be sure to have conversations about renegotiating your salary so you can earn more. Don’t be afraid to find a better job that offers a better salary and benefits to help you increase your income. Additionally, learn new skills in order to earn more money. Consider some of the in-demand skills in the marketplace. As you increase your skills, you can increase your income.
6. Negotiate with Creditors
If you’re struggling to make your debt payments, it’s worth reaching out to your creditors to see if you can negotiate a better repayment plan. This could involve lowering your interest rate, reducing your monthly payments, or even settling for a lump sum payment that’s less than the total amount owed. Be prepared to explain your financial situation and provide evidence of your income and expenses. Remember, creditors, want to get paid, so they may be willing to work with you to find a solution that works for both parties.
7. Consider Debt Consolidation or Settlement
If you have multiple debts with high-interest rates, debt consolidation or settlement may be a viable option. Debt consolidation involves taking out a new loan to pay off all your existing debts, leaving you with just one monthly payment to make. Debt settlement, on the other hand, involves negotiating with your creditors to settle your debts for less than the total amount owed. This can be a risky option and may negatively impact your credit score, so it’s important to weigh the pros and cons before pursuing this route.
8. Keep Track of Every Dollar with a Budget
Oftentimes, you have enough money to reach your goals. The problem is that you spend without realizing how much money you’re throwing away. While some financial experts insist that you can enjoy your gourmet latte every single day, that money adds up. Just by using hacks or making your lattes at home, you’ll save a lot of money that can cover the interest on your credit card debt and more.
If you tend to end up in the drive-thru lane after work, it’s time to plan your meals, prepare them in advance and keep extra snacks in the car. By making these seemingly small changes, you’ll be surprised by how much money you’ll be able to manage and put toward your debt. At the end of the month, sit down and pay attention to where your money went. Then, create assignments for each dollar that comes into your bank account. Whether you need to pay for utilities, gas, or debt, allot a specified amount and don’t go over that amount. By the time you’re finished with the budget, you shouldn’t have any money left over. Make sure every dollar is accounted for.
9. Decrease Your Spending
One of the most common reasons why people divorce is because of money. If you have a relationship you’d really like to hold onto, one of the secrets to lasting relationships is communication. When you and your partner can have transparent conversations about your spending, you can get honest about ways you can decrease it to reach your goals. While it might be tough in the beginning, think of the bigger picture. The bigger picture looks a lot like having more disposable income when your debt gets paid off. The bigger picture also includes you and your partner maintaining a healthy, thriving relationship.
10. Create Systems for Accountability and Incentives
If the quickest timeline you can give yourself is five years to eliminate your mortgage, car note, and credit card debt, five years might feel like an extremely long time when you’re in month two of year one. While it’s good to be realistic about how long it’ll take, find ways to include incentives and accountability in your process. If you’re used to traveling multiple times a year, focus on taking a vacation once a year until the debt gets paid off. Don’t just eliminate vacations for the next five years because that’s a recipe for falling off the wagon. One vacation still allows you to enjoy yourself while you continue to heavily focus on your debt repayment plan.
What Methods Will You Implement to Decrease Personal Debt?
So you have explored ten helpful methods for reducing debt in your life. Looking at your financial situation, which of these methods will be most helpful to you? Consider how much debt you have and what kind of debt it is.
Credit card debt and student loans are common ways that people get trapped in a cycle of debt. This may be your first plan of action to target. Or maybe you are looking to finally pay off that auto loan or mortgage?
Take a look at the interest of all your current debt. You will want to consider this when deciding which debt to pay off first. Which has the highest interest rate and principal? You may want to attack that one first. Calculate each of the loans that you own taking into account the interest then decide accordingly.
Now is the time to take back your financial security in life to build a more stable future for yourself and your family. Be consistent and persistent when paying off your debt and avoid accruing any new debt. This will help you stay on goal and avoid paying additional late fees that further put you in a financial hole.
Paying off outstanding debt is the first step in your financial self-care journey. After you may want to consider a consistent budget, investing for retirement, and more. Start planning your financial goals today and build better financial security this year!
Note: The information on this website is for general information only, and is not a substitute for medical, financial, or legal advice. You, or anyone you are concerned about, are encouraged to seek independent medical, legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. If you or the person you are concerned about appear at risk of self-harm or harm to others, please seek immediate professional assistance.
