Is it important to know how to get out of debt fast? Studies show that, in early 2015, the American household owed an average of over $7, 000 on their credit cards alone. When you construct an equation, and you take out the families who are debt-free, the average debt load becomes double that amount. Add to that the fact that students who left college in 2015 with an estimated debt of $35, 000. Then you will be able to understand why most people struggle with their debts.
When you look at things in this light, the answer to our primary question becomes a vital one. Yes, it is crucial to know how to get out of debt fast. Building on this idea, we have put together for you a list of the best ways to do that. Here they are.
How to Get Out of Debt Fast – the Best Ways
#1. Pay More than the Minimum Sum
Every person who has a credit card, student loan or personal loan has a minimum amount which they have to pay every month. Dividing the total sum plus interest to that minimum sum will give you an estimate of how many years it will take you to pay the entire amount.
Still, if you want to find out how to get out of debt fast, you should know that one of the best ways to do that is the following one. Always pay more than the minimum sum you owe. If you choose this strategy, not only will it help you save on the interest you’re supposed to be paying, but it will also speed up the process. In other words, if your loan extends over 15 years, for example, you can reduce it to eight or even five, depending on how much you’re willing to pay every month.
Tip – make sure that your type of loan will not charge you any extra fees or penalties for choosing to pay more in advance. If it does, then the whole endeavor will defeat the purpose.
#2. The Snowballing Method
If you liked the first strategy and are willing to pay more than the minimum amount, then you might like the snowballing method as well. It will speed up your paying process even more and help you build momentum.
The first step you need to take is to list every single debt that you have to your name. String them from smallest to the largest. The next step requires you to invest all your excess funds into the lowest balance you have. All the while, you must remember to keep making the minimum payments as far as all your more considerable debts are concerned.
When you have managed to pay off the smallest debt in its entirety, you can move one to the next smallest one. Keep going. In time, you will notice how you have paid off all your debts entirely.
The method is called ‘snowballing’ because you are virtually snowballing all your extra cash in the direction of your debts until they will exist no longer. At that moment in time, you will be free of debt.
#3. Earn Some Extra Money
Bearing down upon your debt like it’s your worst enemy is a great plan, but it ultimately requires you to use money which you already own. This third method on how to get rid of debt fast will ask you to earn some extra money which you can then use to pay what you owe.
The advent of the internet brought forward fantastic opportunities for everyone to make some extra bucks. You can log onto platforms such as Upwork or TaskRabbit.com and get some easy and fast jobs. Use the money you earn to pay more than the required monthly amount as far as your debts are concerned.
Tip – don’t use these funds to pay off what you owe every month because you will get nowhere. That is not a solution on how to pay out your debt faster. Instead, keep paying your rates on a regular basis and use the extra money to pay in advance.
#4. Have a Garage Sale
Another way to make money as quickly as possible to pay off your debts promptly is by having a good, old garage sale. It will help you unload all the things which you no longer want but which are still good enough to use and could bring you a profit.
Take a look around your house. Most of us have a lot of things lying around that we hardly ever use. You, probably, have them as well. Therefore, why not convert all these items into cash you can use to advance your debt?
If you’re not a huge fan of a physical sale or you don’t have a place where to organize it, you can always turn to online marketplaces.
#5. Say No to Expensive Habits
When you find yourself in debt and are coming up short on the money every single month, it’s time to evaluate your daily habits. It always makes sense to look at your expenses because you will surely find at least one corner to cut. For example, you can ditch that latte you buy every morning or the fast food you eat all the time.
In the same way, you can bring your personal bottle of wine when you go to a restaurant, stop shopping online, and start cooking at home. All these strategies will help you save a lot more money than you could have ever imagined. You can then use the extra cash to pay off your debt sooner than planned.
If you want to know how to get out of debt fast, you must be prepared to cut some expenses or to get a second job. It might seem easy to continue living with your debt, but when you draw a line and calculate your total losses, you will not feel the same way. The more you postpone paying off your entire debt, the more interest you will collect. By means of consequence, more interest means you will lose a lot more money than you anticipated.
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