How to Pay Debt Off Faster

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how to pay debt off faster

You’re not alone – a lot of people struggle with debt. In fact, research shows that around 80% of Americans have some type of debt. If you’re tired of being in debt and want to pay it off faster, you’ll need to come up with a strategy and change your spending habits profoundly. The first step is knowing how much you owe. Then you’ll need to:

Cut Costs

You might not even realize it, but you’re probably spending a lot of money on unnecessary things. Start by tracking all your expenses, and find what you can cut and what’s essential for you. There are many free apps you can use to help you with that, like Mint. You should also cancel all the subscriptions and memberships you don’t use, and look for discounts and coupons on products.

Sell Everything You Don’t Need

One way to get some extra cash is by selling stuff you don’t use, such as clothes, home appliances, bicycles, or anything valuable that you won’t miss as much. There are many places you can list the items, for example, Instagram or Craigslist. You can also try pawn shops if you have jewelry or other valuable items.  

Get a Side Hustle

Extra cash is always good, especially if you have debt. Therefore, it’s a great idea to get a side hustle. You can get a temporary job working in things such as a waiter/waitress in events, driving for rideshare apps, or freelance jobs like translation, copywriting, or photography. 

Create a Budget and Stick to it

If you’re struggling with money, it’s crucial to have every penny accounted for. If you’re lost and don’t know how to save money yet, you can follow the 50/30/20 budgeting rule. This rule consists of 50% of your after-tax earnings in essential things, or your needs, such as rent and food; 30% for wants such as shopping and dining out; 20% for investing.

Balance Transfer

Is the majority of your debt on high-interest credit cards? The good news is that you can transfer the debt to another card with a low introductory APR, therefore paying less with easier-to-manage payments. This will help you save a lot of money. However, be careful and disciplined to not get into more debt.

Use the Snowball Method

Dave Ramsay created this strategy, called the Snowball Method. It’s important to remember that you need to have at least $1,000 in an emergency fund before you even start it. Then, you make a list and order your debt from smallest to largest. After that, you start by paying the smallest one, and the minimum payment on the other ones. After you’ve managed to pay the smallest one, you roll over to the next and repeat until you paid all your debt off.

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