Interested in debt consolidation? Check out Fiona
From student loans to credit card payments, when payments start accumulating, it can seem overwhelming to figure out how to get out of debt. If you constantly feel like you can’t catch up on your expenses each month, you’re not alone.
More than 80% of Americans found themselves caught in the cycle of debt. Just because you’re currently in debt, doesn’t mean you have to stay in debt. You just need a plan to lift yourself out of the cycle and put your financial future back on track!
12 straightforward tips to get you out of debt fast!
When trying to tackle a large mass of debt, you might not know where to start. We’ve put together 12 easy steps you can take today to show you how to get out of debt.
1. Get real with yourself
You may be ignoring the amount of debt you currently have and avoiding the harsh realities. The most crucial step to take is to lay out your debt and be honest with yourself. Go through all your credit cards, student loans, car loans, mortgages and write down your current debts. What does your debt realistically look like? Keep this number in front of you and update it monthly to reflect your progress.
2. Look for opportunities to cut back
A simple way to pay off debt is to cut out unnecessary, expensive payments and use that extra cash to cut down your debts. If you’re currently spending a ton on memberships, services you don’t use, eating out, or traveling, consider cutting back and finding cheaper ways to achieve the same things. For example, you could shop at thrift stores instead of a retail store or use YouTube or free apps to find virtual workouts instead of paying for a gym membership.
3. Plan, plan, plan!
Without having a proper budget plan in place, you’ll surely blow through your money faster than you expected. Set a budget for your expenses and follow through with it. Make sure to include specific costs in your plans, such as how much you want to spend on groceries, gas, and fun. Try dividing your pre-determined funds into cash envelopes to ensure you stay within budget.
4. Eat at home
Going out to eat can cost up to 7x more than cooking your meals at home, with the average U.S. household spending over $3,000 on eating out every single year! Try to plan out your meals every week according to the food you like to eat by creating a grocery list and sticking to your budget.
Don’t forget to treat yourself to a meal out every once in a while–within budget. Using your “eating out” budget for date nights, birthdays, or celebratory moments makes for an extra special night!
5. Debt consolidation loan
If you have too many debts floating around at different interest rates, consider looking into a debt consolidation loan. With a debt consolidation loan, you’ll be able to secure a personal loan that requires installment payments each month. If you’re able to achieve rates lower than your current interest rate, this is an excellent option to pay off debts.
6. Balance transfers
If you’re having trouble paying a credit card because of the high-interest rates, you might want to consider using a balance transfer. Moving your balance from a high APR to a lower or 0% APR will help buy yourself some time to pay off more debt. However, there are some downsides, like needing excellent credit to get approved and transfer fees to take it from one credit card to another.
7. Cash advances
Cash advances don’t mean turning towards predatory payday lenders. Some cash advances offer short-term borrowing at affordable rates, like MoneyLion’s Instacash, which can cover you until payday without paying expensive late fees. For example, MoneyLion lets you borrow up to $250 with 0% APR, with same-day funding.
8. Credit counseling and debt management
Turning to a professional can sometimes be the best way to help yourself get out of debt. Consider contacting a credit counseling or debt management professionals who can help you create an actionable plan towards managing your debt. You can find reputable providers through the U.S. Department of Justice by entering the state you live in. Try to steer clear of companies who attempt to charge you lofty fees without seeing your financial situation.
9. Second job
If you feel strapped for cash, adding a second job can help you create additional income to pay off bills and debt. Look for a job that can work around your full-time job hours, such as working in a restaurant on the weekends or picking up a retail job in the evenings. Check your local job boards, such as LinkedIn or Indeed, to find a second job opportunity.
10. Get a higher paying job
No matter how much you budget, if you’re simply not making enough money to cover your expenses and bills, you won’t be able to get out of debt. Try approaching your current job to see if they’ll offer you a raise. If that’s not available, consider looking for a different position with higher pay.
11. Side hustles
Adding a side hustle to your full-time job can help pay down debt faster. There are tons of flexible part-time gigs that you can choose from, depending on what you enjoy doing and your hobbies, such as dog sitting, selling items on Etsy, flipping furniture, or even delivering food through GrubHub or UbersEats.
12. Leave the credit card at home
When you have access to a high-limit credit card, it’s easy to spend without considering your debt. Make a habit of leaving your credit card at home to stop yourself from using it. If you do end up in an emergency, you can always call your credit card company over the phone. While you might be tempted to close your credit card, this move could significantly impact your credit score, so avoid this altogether.
Getting debt-free one step at a time
There are many creative ways to get out of debt just by following these small changes and working towards your financial freedom. Be patient with yourself as you go through the process and have a little fun along the way to avoid burnout. Once you’ve finished paying off your debt, you’ll have extra money to travel, buy a home or put towards investments.
Not sure how to begin your investment journey? MoneyLion makes investing easy with a fully managed $1/month diversified portfolio of mixed stock and bond ETFs. Set up your auto-investing account today and experience our straightforward and simple approach to investing!