How can I get out of debt fast? Is the million dollar question began asked by individuals. According to Meir Statman, a behavioral economist in a recent statement “getting out of debt is the financial equivalent of trying to quit smoking.” It is important to understand that just like every other bad habit, good intentions alone will not be enough.
To ensure success, you need to break your underlying patterns of behavior. Have you ever imagined what you have to go through each time you find yourself in debt or each time you allow your debts to pile up to several huge sums? I want to share with you 15 Ways To Get Out Of Debt Fast And Save Money below.
If you must learn how to stay out debt and save money, you must cultivate the habit of budgeting. This should be the first thing to do, drawing up your budget and knowing exactly what is needed, necessary and what is not too important on your list.
You can do this by gathering all your bank and credit card statements, sitting down and making a budget based on what is available. Organize what you are paying out monthly into categories and handle them as listed.
Reduce Your Interest Rates:
Another way to get out of debt fast and save money is to reduce how much you pay on interest. To do this, you can start by calling your current credit card companies to explain to them that you intend to transfer your balance to another issuer excerpt they reduce their rate.
This is because all credit card companies run promotional programs with low-interest rates that help individuals. They will be more than willing to put you on one of those programs that will help reduce your debt all you need to do is ask.
Pay off debts with the highest interest rate first:
Every debtor is a prisoner of the lender. This is because you are always distressed each time you come to your lender or each time you know you have some cash to pay to someone. As the case may be, there is a sure way of making all this go away and this start by paying off the debt starting from the ones with the highest interest rate.
You can list them in other to figure out which among them have the highest interest rates. If this is done right, you will realize that at the end of the day, you will be left with little or no debt to pay. Why it is important to pay off debt with the high-interest rate is because they consume the larger part of your income leaving you with no saving if not taking care of.
Pay more than the minimum balance required.
To ensure your debt is paid off fast, you need to pay more than your minimum balance on your credit card statements each month. This is because “Paying the minimum – usually 2 to 3 percent of the outstanding balance – only prolongs a debt payoff strategy,” according to Prabhakar.
Whether it is a credit card debt, personal loans, or student loans, the best way to pay them off sooner and have some savings is to make more than the minimum monthly payment budget or making the payment on weekly bases. Doing this will not only help you save on interest throughout the life of your loan, but it will also speed up the payoff process. “Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments.” Or if your minimum payment is $100, try doubling it and paying off $200 or more.
5. Using the debt snowball method.
This method works like magic, if you really want to pay off all your debts, this means paying more than the minimum monthly budgets on your credit cards and other debts. Using the snowball method will sure speed things up, build momentum and help you realize some savings.
How it works
The steps involve listing all of the debts you owe from smallest to largest. Use your excess funds at the smallest balance, while making the minimum payments on all your larger loans. Once the smallest balance is paid off, start putting that extra money toward the next smallest debt until you pay that one off, and so on.
Close any account that is no longer needed
If you have any unused credit card from lenders with whom you’ve had a long relationship, it will boost your credit score. On the other hand, having too many will harm it. According to research, 3 credit cards is what works best and try to never spend more than 50% of the available credit on any of the cards.
This will keep your score at its highest. Also, you should consider closing all your store cards, if you need to make a purchase then use your credit card and pay it off at the end of the month.
Get a cool off and leave those cards at home
Most times we spend unnecessarily because we are always with our credit cards. If you are such person and you want to know how you can get out of debt fast and also have some savings, then I will suggest you leave those cards at home sometimes to avoid excess spending. While leaving them at home, you should also ensure you don’t keep them where people can easily see them.
Jerrold Mundis in his book titled “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously: Based on the Proven Principles and Techniques of Debtors Anonymous” extensively discussed most of this issues and it is best you get some ideas from him also.
8. Sell off unwanted items.
This is another good method for you to pay off your debts fast and also make some savings. There are lots of items we keep in our houses that are not needed by us as an individual but lots of people want that item but are looking for it at a cheaper rate.
So it is advised to use this opportunity to sell those items off and make some cash which will also help you pay off that debt. Search through your home, look for items you can sell off. Karimi said “Do some research to make sure you list these items at a fair and reasonable price,” “Take quality photos and write an attention-grabbing headline and description to sell the item as quickly as possible.” Any profits from sales should go toward your debt.
9. Change your habits:
Every debt owed comes as a result of habit. This can be the habit of excess spending either on things required or on unnecessary things. According to Hamm “Your daily habits and routines are the reason you got into this mess.” You can spend some time thinking about how you spend money each day, week and month and see how you can cut down on excesses.
Try to Understand Your Loans and Make Plans:
If you must pay off your debts fast and save money, you have to understand your loan pattern and also create an accurate repayment method that will help you get rid of it as fast as possible. You can do this by using a repayment calculator.
Plug the information about your loan into a repayment calculator or use your loan servicer’s online account tools. Learn how much you need to pay per month in order to pay off your loan within a specific amount of time.
11. Nicely ask for loan repayment money for gifts
This will go a long way in helping you also in your debt payment. To do this you can nicely tell your friends and family that instead of giving you the traditional birthday, holiday, and graduation gifts, you’d rather receive funds that will help subsidize debts and go into paying down loans.
Give yourself some credit and reward yourself.
According to Bakke “The only way to completely pay off your credit card debt fast is to keep at it and to do that, you must keep yourself motivated.” Do not see yourself as being in punishment while paying off your debts because that won’t help you pay it off any faster. So at some point give yourself some rewards and stay motivated. Just make sure to reward yourself within reason.
13.Use your work bonuses to pay off debt fast:
Paying off debt fast is not that easy, this is why you have to make great effort to get out of it. At this point, you can also try putting your work bonuses to help with the payment. If you receive a job bonus around the holidays or during the year, try to allocate part of it towards your debt payoff plan. It’s more important to fix your financial situation than own the latest car.
14. Get a part-time job:
During the holiday period or other seasons, there are lots of part-time jobs that spring up. You can scout for and get some part time jobs which can help in minimizing expenses on your major income.
If you’re willing and able, you could pick up one of these part-time jobs and earn some extra cash to use toward your debts. Whether you want to pay off debt fast or save money, this is a good approach that can help you achieve that.
15. Always spend less than you plan to:
Most times, we make wishes and plans bigger than our pay cheques, the popular saying, “You can have almost anything you want; you just can’t afford everything you want,” is true. Due to the fact that people want what they can’t get, they have been forced to spend more than they earn and this leaves them in huge debt.
If you want something, don’t buy it unless you have the money. More also, if you can be satisfied with less than you would ideally want, even temporarily, you can use the money you save to pay down your debt fast. By the time your debt is paid off, you’ll probably have adjusted to your new priorities, and you can use the money that you are saving to put towards other financial priorities.