Have you found yourself in a vicious cycle of revolving debt? You might feel like you’re living paycheck to paycheck and working only to pay off your bills. Trust us, you aren’t alone. According to the Federal Reserve Bank of New York’s Household Debt and Credit report, the average American has around $51,900 in overall debt.
Looking for a way out of the rat race? Keep reading for our top tips and tricks to get rid of your debt once and for all!
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6 Tips On Paying off Debt
Seeing how much debt you have stacked against you may seem overwhelming. Check out our list of helpful tips on how to knock out your debt starting today.
Cut Up Credit Cards
Cutting up your credit cards would prevent you from using and abusing them. If you’re one of those people who can’t control your overspending, you need to keep your high-interest credit cards far away. The good news is that once you pay down the debt and have reached a healthy 30% (or under!) credit utilization, call up your creditor and request a shiny new card. A short term break-up with your credit card (without actually closing the account) is the perfect therapy to overcome unhealthy habits.
Credit Card Tip: Once your card is completely paid off, don’t immediately close the account. Keeping a line of credit for several years will help improve your credit score – even if you only use it a few times a year.
Stop Eating Out
We repeat, stop eating out! The average American spends around 11% of their income on restaurant meals. That means if you make $3,000 a month, $330 a month is going towards dining out. Yikes! Opting to cook at home is going to cut your costs significantly and those extra savings you can throw onto your debt.
Being prepared and planning ahead will keep your finances organized and predictable. Write out a monthly calendar of all output expenses including food costs, fixed and variable expenses, and auto-pay schedules. You’ll know where every penny is going and can cut back in areas you’re overspending.
Work Out At Home
Due to COVID, more gyms and fitness programs are offering killer virtual workout programs for a fraction of the cost. If a paid program doesn’t fit within your budget, YouTube has loads of free workouts that’ll help you break a sweat but not the bank.
Drop Bad Habits
We all have em’! Whether your bad habit is drinking, shopping, or smoking – cut it out! Keep track of how many days you go without your vice and treat yourself by dropping cash bombs on your debt.
Sit down and write out your every dollar that comes in and every dollar that is owed. Be honest with yourself about where you are overspending. Once you have a clear picture, cut back, and reallocate that extra spending to your debt. Pay off the debts with higher interest rates first and snowball from there. Priorities over luxuries!
One of those most important tools when sticking to a budget is being able to track your spending habits. If you don’t know where your money is going, more than likely you aren’t practicing financial responsibility. With a MoneyLion RoarMoney account, you can monitor your daily spending right from your phone. We break down your spending into specific categories like grocery, bills, and shopping to help you stick to your budget.
Sign up with the mobile app to get started today!
Paying Off Debt With Low Income
You might find yourself thinking, “I can’t pay off my debt because I don’t make enough money.” Maybe you’re a student who works part-time or you’ve just landed your first post-college entry-level job. Whatever situation you’re in, try thinking outside the box!
These days side hustles are easy to come upon and they typically require little time and no money. Capitalize on small gigs like Uber, PostMates, and InstaCart to make a few extra bucks here and there. Don’t have a car? Look around your home for items to sell on Facebook marketplace, eBay, and OfferUp. Clothes, furniture, home decor, sports cards, and movies are just a few ideas. Someone else’s junk can be someone else’s treasure!
Should I Pay Off Debt or Invest?
Becoming debt-free is one of the fastest ways to financial independence. While investing is a way to secure your future and have your money work for you. What if you could pay off debt while investing? At MoneyLion you can do just that!
Our Credit Builder loans can help you pay down your high-interest debts while building credit, with our competitive APR rates and affordable repayment terms. We encourage sustainable borrowing and that’s why we hold a portion of your Credit Builder loan in an interest-earning Credit Reserve Aaccount. After you’ve paid back your loan in full, we’ll release the funds from your Reserve account back to you. It’s the perfect way to borrow, save, and build your credit!
What should I do when I’m ready to invest? A MoneyLion investment account is the perfect way to easily invest your money! There are no account minimums, and you can customize your fully managed portfolio based on your comfort zone and risk tolerance. Invest as little or aggressive as you’d like and do it with ease!
Kicking Debt to the Curb
Getting out of debt may seem lightyears away with significant sacrifices made. But, if you look at the task as temporarily giving up the good for the great, the journey to becoming debt-free is much more peaceful. Sticking to a budget and using MoneyLion’s plethora of financial tools will guide you to a bright (and debt-free) financial future!