Getting out of debt can be a challenging process. Whether you’re trying to pay off a credit card balance or multiple debts, it requires patience and resolve.
Putting a little extra money toward your debt each month can help you make progress. It can also help you save for future expenses or build an emergency fund.
Paying Off High-Interest Debts First
Regardless of your chosen debt payoff strategy, it is important to stay current on all your debt payments. You may also want to consider taking on a side hustle or reducing your spending to help you fuel your debt repayment plan. If paying off your unsecured debt like credit cards, personal loans and medical bills is challenging or unsustainable, you may want to consider debt relief.
With this strategy, you list your debts by balance and start by eliminating the smallest debt first. This method is psychologically motivating and builds momentum as you pay off creditors, like a snowball rolling downhill. It may also save you the most money in the long run.
Paying Off Debts With the Highest Interest Rates First
Managing debt can be difficult. Keeping track of multiple debts, payment due dates and interest charges can be overwhelming. Getting out of debt requires patience and resolve. It also means assessing and revising spending habits.
Creating and sticking to a budget is another important step in the process. You can use a budgeting app or spreadsheet to track your monthly bills, income and daily spending.
Once you have a full picture of your debt, it’s time to create a plan to pay off your balances. Whether you choose the debt snowball or debt avalanche method, start by paying off the smallest debt first.
Paying Off Debts With the Highest Payment Amount
It’s important to create a budget, which can help you manage your expenses and debt payments. It’s also a good idea to look for ways to bring in more income. This may include negotiating a raise at your job, selling items you no longer use or taking on a side hustle like dog walking or house sitting.
Make a list of all the debts you owe along with their types, total amount owed, minimum monthly payments and due dates. You can find this information by reviewing monthly debt statements or by logging in to your lender accounts. Organize the list by total amount owed and lowest to highest interest rate.
Paying Off Debts With the Highest Minimum Payment Amount
Tightening your belt might not be the most fun, but it will speed up your debt repayment journey. Try to cut back on extra spending and save as much money as you can, even if it means skipping dinner out or canceling your streaming service subscription.
Another option is to increase your income by starting a side hustle, working overtime or asking for a raise at work. You can also make extra cash by selling items you no longer use — from clothing to household goods to cars on sites like Poshmark, the RealReal or Facebook Marketplace. You can also put any extra money you make toward your debts.
Paying Off Debts With the Highest Balance
A Harrisburg bankruptcy lawyer may tell you that creating and sticking to a budget can help you get out of debt. Using budget apps like Mint and YNAB can make it easy to track your spending, while also showing you areas where you can cut back. Another strategy is to switch to paying with cash, which can help you avoid impulse purchases and eliminate credit card fees.
If you need extra income, try getting a side hustle such as house sitting or driving for Lyft or Uber. Bringing in more money can help you reach your debt repayment goals faster. Plus, you can use the extra income to reward yourself with something fun like a night out or a round of golf.
Paying Off Debts With the Highest Amount of Interest
You can also get out of debt faster by avoiding new loans, tightening your budget and increasing your income. You can do this by working overtime, negotiating a raise or even starting a side hustle.
Getting out of debt is easier than you might think. You can use the debt avalanche or debt snowball method to help you pay off your balances quickly and save money on interest charges. However, you should always consider whether working with a debt relief company is right for you. It may be the best option to reduce your debt burden and improve your financial situation. This will allow you to put more of your income toward other goals, like saving and investing.
