In 2015, an average household in the US owed $7,281 on card credits. And that is just nothing compared to the average debt of every American who owed $15,609 on general debt and a massive $35,000 on loans for college students. And the numbers just keep on piling year after year after year! No wonder why a lot of people are struggling these days.
So if you’re one of the many people who are tired of living from paycheck to paycheck because of debt, then we suggest that you go on reading as we are going to discuss the 10 brilliant tips to reduce debts in this article.
Your debt-free life is just ahead. So let’s begin…
Know Your Total Debt
The first step in dealing with debt is to know your total debt. Without going through this, you’ll be having a hard time to pay them off.
Though this is crucial, some people tend to neglect on taking this step. That’s why they end up continuing to pay their bills with no concrete plan. And as a result, people with credit card debts just send off the minimum monthly payment with the assumption that this would get them out of debt quickly. But the truth is, this is ACTUALLY what credit/loan companies want as paying the minimum amount will only lengthen the loan period.
So if you want to get out of debt quickly, then we recommend that you make a bold move and ask the company how much you owe every month to them including the annual percentage rate (APR). And this applies to all other companies you are in debt with.
Try The Debt Snowball Method
The next thing you have to do is to determine your liabilities from the smallest ones to the largest and send more payments to the small debts and the minimum payments to the largest debts. Then start allocating your extra funds to the next smallest debt once the previous one is paid off and so on.
Do this process until all your debts are fully paid.
Pick A Sideline Job
Doing the debt snowball method will definitely reduce debt fast, but you can increase your efforts of speeding up the debt-free process by monetizing your skills. Try to grab sideline work like mowing yards, babysitting, or working online as a virtual assistant and earn extra money to pay off your bills.
Look For An Inspiration
It’s no secret that the thought of paying debts can be taxing. So it would really help if you find some thought that will motivate you to keep going. Remember, no debt is equal to financial freedom… Never lose sight of that goal.
Allocate Your Finances
Budgeting really helps. So as soon as you receive your monthly salary you have to make it a point to allocate your money on debt payments first, practical expenses (food, kid’s allowance, etc.) second, savings, and for things that you want (clothes, shoes, and the likes) if you still have money to spare.
Live On A Strict Budget
Try to cut on expenses as much as you can and try to live with that budget (at least, until all your debts are paid off). Once you’re free from debt, then you can bring back any discretionary spending to your monthly plan again.
Avoid Impulsive Buying
Sometimes, we can’t resist the urge of buying that beautiful dress at the shop window or that trendy designer bag at the mall. And you end buying it only to feel guilty later that you bought something that you don’t necessarily need at the moment. This is called impulsive buying and it’s something that you need to avoid once you are paying off your debts.
Consider Selling Stuff That You’re Not Using Anymore
Raise funds to pay off debt by selling things that you’re no longer using. Surely, there are some old clothes in your closet that you’re not using anymore. Or better yet, you may have some valuable items that you’ve already outgrown and maybe it’s time that you let go of these stuff so other people can use it.
Change The Way You Look At Money
Don’t see money as a tool for getting the things you want. Instead, be a master over it and you will realize its true value. You’d be surprised to wake up one day that you are in control of your money and be more willing to pay off any debts without hesitation.
Train Your Willpower
And finally, you must have the will to do all the things we mentioned above. Do stuff that wills you to reduce debt fast and don’t forget to reward yourself a little reward like buying yourself a cup of coffee or take some time off to relax without hurting your budget.