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If you find that your current debt load is either stuck in place or climbing, the tips below can help you get a handle on the situation and pay off your debt more quickly. Some of these tips are about consolidation; others are about managing what you have more effectively and earning more.
1. Take Out a Personal Loan
A personal loan at a lower interest rate may allow you to lower your overall payments. Once your debts are consolidated, you may have a bit more money at the end of the month, which you can put directly on the personal loan.
2. Focus on Balances
List your debts by who you owe, the total balance, the interest rate, and the monthly payment. Sort them by total balance and pay off the smallest debt first. This is also called the snowball method. When that debt is paid off, roll the payment onto the next smallest debt.
3. Focus on Interest Rates
Using the same spreadsheet, sort the debts by interest rate and tackle the highest interest rate first. This is also called the avalanche method. Once you’ve wiped out the highest-interest debt, roll that payment onto the next highest interest rate.
4. Transfer Credit Card Balances
If you start with the snowball, you can switch over to the avalanche method. Pay off the smallest credit card debt and leave the card open. Call the cardholder to see if you can get a 0% interest APR transfer. Roll as much high-interest debt as possible onto this offer and pay it off within the 0% interest period.
5. Build a Budget
A budget can help you understand where your money is going and confirm that your expenses mesh with your values. If you value health and fitness, your budget can help you find unhealthy foods that need to be cut out. Stay flexible; rigid budgets often don’t work because they feel like punishment.
6. Take On Another Job
Take on a weekend gig or try to get more hours at your current job. Take care not to spend this extra income; route it directly into a savings account that you can ignore so the funds can build up.
7. Learn Frugal Skills
If you eat out because you can’t cook, learn to cook. Start simple; learn to cook a piece of fish and prepare a salad. Learn to sew on a button or hem your work pants. You don’t need fancy tools or skills to learn basic frugal skills.
8. Go Back to Cash
If you swipe your card without reviewing the total, put your cards in an inconvenient spot. Review your last three fuel fill-ups and take cash to the gas station. Study your last three grocery receipts and take cash to the grocery store.
Conquering your debt will be easier when you become more mindful of where your money is going. Spend some time thinking about your goals and values, then do your best to reflect that in how you spend your money. By aligning your spending with your priorities, you can avoid unnecessary expenses that don’t contribute to your long-term objectives. This strategy also involves creating a detailed budget that tracks all your income and expenses, helping you identify areas where you can cut back and save more.
