With 80% of Americans dealing with some kind of debt, you’re not alone if you’re struggling to pay off loans or credit cards. It can be frustrating to balance paying off debt with the life you want to live, but it’s necessary. With a few small changes, you can pay off your debts without upending your entire life.
Here are 5 tips to help you pay off debts ASAP.
1. Do Some Budgeting
When you’re faced with a big wall of debt, it might seem difficult to imagine overcoming it. However, with some diligent budgeting, you can pay off your debt without upsetting your quality of life too much. No matter how big your debt is, you can find a way to start working on it.
It’s intimidating to think of owing many thousands of dollars to someone when you’re not bringing that much in on a monthly basis. Since you can’t go backward, you need to face what’s in front of you figure out how to budget.
If you’re like most people, your biggest expenditure is your housing costs. When you’re talking about rent, cable, internet, electricity, and gas, you’re not talking about a lot of extra spending but you can make efforts here and there.
For people with a big cable package, think about scaling it back and cutting out some extras you don’t need. If you’re only reading emails and watching the occasional YouTube video, you don’t need the highest speed internet available.
Make an effort to cut back on heating and cooling costs with more or less clothing where appropriate. It’s a tough struggle, but with some small changes, you could end up keeping your quality of life while paying off debt.
2. Take a Vacation From Vacations
If you’re trying to pay off your debt, you might be working more hours than you’d expected. You could be stressing out trying to balance your work and life while you make generous payments to your lending institution. Stress could build up and make you want a vacation more than ever, but now is the time when you need to be creative.
You can’t take vacations when you’re drowning in debt. However, if you’re stressed out and tired, you could experience burnout. To balance your stress and your need for relaxation, put together some low-cost local solutions or “staycations”.
If there’s a nice wooded area where your friend has a cabin or where you can pitch a tent, make a date to head out there for a night later in the month. You need to have one full day where you can check out, but you need to do it for cheap. Even a day trip to the beach is a smart way to get out of your headspace without having to pay for a flight.
You can still take time off, but you need to make the most of it so that when it’s time to work, you can focus on what you need to do.
3. Consolidate Your Debt
Some people have multiple debts from many sources. You might have debt from one institution that charges 10% APR while you have another that charges you 20%. If they’re about the same amount, you should consider consolidating those loans together.
If you consolidate your debt, you could be paying a much smaller APR and manage your loans with one financial institution.
When you’re paying off debt to multiple institutions, it’s easy to start to get mixed up and forget to pay one or the other. When you have one institution to pay back, you won’t make any mistakes.
It’s also nice to have one institution to deal with in case you have trouble paying your loan back. If you’ve been a good and responsible client, they’ll work with you to get you back on track.
For some more tips on consolidating debt and paying it off, check out more on debt management.
4. Focus on Low Hanging Fruit
You need to prioritize your debts when it comes to paying them off. Along with the principle, you need to consider the hassle of the interest as well as any fees you incur over time.
If you’ve got several small debts that you could pay off in under two months, focus on them. Get them out of the way to focus on your biggest debts.
If you aren’t able to consolidate your debts, make sure that you’re paying attention to interest rates. If the smallest debt you have has a rate that’s three times your largest debt, you need to get that small debt taken care of. If the interest starts compounding, you’re going to be up the creek without a paddle.
5. Pick Up Extra Work
It goes without saying, but to pay off debt, you’re going to have to work extra hard. If you have any extra time at all, you should consider picking up some extra work. Rather than have this debt hanging over your head for the next few years, one rough summer that digs you out of debt might be worth the hassle.
If you’ve got any kinds of skills that you’re not using at your job, now’s the time to dust them off. For people with talents in cooking, crafting, or handiwork, there’s plenty of side jobs you could do. You could work evenings in a restaurant, help a friend to support their small business, or help do small repairs around a neighbor’s house.
Paying Off Debt Doesn’t Have to be Painful
With the right amount of adjustments and reconfiguring, you won’t have to upset your entire life to pay off your debts.
Paying off debt feels good because you know as soon as you’re finished, you can get on with building the life you want to live.