10 Ways to Get Out of Debt This Year
If you have credit card debt, student loans, or any other kind of long-term debt, it may seem like there’s no way to ever pay it off. Don’t lose hope! There are many ways you can use to get out of debt this year and make lasting changes to your financial situation for the better! If you put in the work, paying off your debts will be easier than you think! Here are ten ways to get out of debt this year so you can finally reach financial freedom!
1- Make a budget
- Set a goal for your debt payoff. You need a plan and a deadline. For example, you may want to pay off $5,000 in credit card debt in six months or have an emergency fund of $5,000 saved up by the end of the year.
2- Consolidate Debts
Consolidating your debts into one monthly payment is a good way to start getting out of debt. By combining all your debt into one high-interest loan, you can pay off your balances faster and save money on interest charges.
3- Reduce Spending
Cutting back on spending is an easy way to reduce your debt. All you need to do is cut back on one or two things that you spend the most money on and you’ll be surprised by how much money you can save in a year. If you were spending $150 a month on eating out, cutting that down would save you $2,400 a year!
4- Pay off Low Balance Loans First
This is easier said than done, but it’s important to get your most expensive loans paid off first. By doing this, you will be reducing the amount of interest you are paying on these high-interest loans, which will save you more money in the long run.
If you have a credit card with a balance and a student loan with a balance, for example, it’s advisable that you pay off the credit card before making any payments on your student loan.
5- Cut Back on Non-Essential Expenses
One way to get out of debt is to cut back on non-essential expenses. Consider reducing the amount you spend on entertainment, eating out, and clothing. You might also consider eliminating or lowering your cable and internet bill.
6- Improve Your Credit Score
A credit score is an important factor in determining the interest rate on your next loan. If you have a good credit score, you may qualify for lower interest rates and be able to borrow more. You should check your credit report regularly and work to improve your credit score if it’s low. A few ways you can do this are by paying all your bills on time, disputing incorrect information on your report, and limiting the number of inquiries made against your name.
7- Talk to your Creditors Directly
You may be wondering what you can do if you find yourself owing money and struggling to pay off your debt. Well, one thing is for sure: you should contact your creditors as soon as possible. When it comes down to it, they want their money and will work with you if they are able to get their due in a reasonable amount of time. If not, they’ll eventually try harder methods like seizing your bank accounts or putting a lien on your house.
8- Buy Used Instead of New
If you’re looking for a new car, don’t buy it new. Buying a used car that is only a few years old can save you a lot of money. Plus, the depreciation costs of a new car are high, which means you’ll lose money in the long run. It’s important to remember that interest rates go up as your credit score goes down. So if you have a low credit score, start rebuilding it by paying off your debts and starting with the smallest balances first.
Don’t waste money on late fees or penalties from missed payments by setting up automatic payments from your checking account.
Lastly, invest any extra cash in stocks or bonds instead of letting it sit idle and lose value through inflation.
9- Reassess Insurance Policies and Update them as Needed
When you’re in debt, it’s tempting to cut corners and save money where you can. But don’t forget that insurance is an important part of your household budget. If your policies are due for renewal, you may be able to save some money by shopping around. Also, check the value of your home and car insurance policies. You may be overpaying for coverage or need more coverage than what you have now.
10- Find Other Sources of Income
– Sell Your Stuff
– Borrow Money
– Take a Part-Time Job
– Apply for an Interest-Free Loan
– Negotiate With Creditors Maybe you can offer something in return for reducing your debt.
– Consider Bankruptcy: I’m not talking about declaring bankruptcy here, but instead filing a Chapter 7, which allows you to keep your property and pay off your debts over time. The downside is that it’s costly, both financially and emotionally.
– Limit Spending: You might not be able to get out of debt quickly if you don’t spend less than what you earn.