You’ve had it with your debt. It’s a constant worry, and you’re anxious to get rid of it. You’ve been trying to tackle it, yet you don’t feel like you’re making much progress.
That’s understandable, but think about it: how long did it take you to get in your situation? To get out of it, you’ll need persistence, forbearance, and perhaps multiple approaches. With that in mind, here are budgeting tips to help you become debt free.
Find Ways to Cut Spending
Let’s make this clear: it doesn’t matter what financial strategy you use if you don’t control what got you in trouble from the start – excessive spending.
This means tracking your outlays to determine how much you’re spending, and what you’re spending it on.
Once you do this, you can find ways to save money (that daily latte on the way to work, perhaps?) that you can put toward your obligations. Those small purchases do add up, and budgeting can get you everywhere.
Embrace a Debt Payoff Approach
Two popular debt payoff strategies are debt avalanche and debt snowball. With the former, you tackle your highest-interest debt while making minimum payments on your other obligations.
After you wipe out that debt, proceed to the one with the next-highest rate. Rinse and repeat until your debt balance is zero.
Debt snowball works best for those who need a little motivation to keep the “ball” rolling. After paying off your smallest debt – and duly celebrating – you go after the next-smallest, proceeding in kind until you are debt free.
As with the debt avalanche strategy, be sure to keep making minimum payments on all your other debt.
Employ Automatic Transfers
Use automation to your advantage. You can have your bank make automatic payments on your plastic and use automated reminders to stay atop of payment due dates.
There are also online tools that you can use to see how you’re progressing in terms of eradicating debt. Yay, technology!
Consolidate
If you have a lot of bills coming in and are having trouble keeping track of all the varying payments and due dates, debt consolidation may be the strategy for you.
It entails rolling your debts into a single fixed payment that’s due on the same date each month. If your credit is good, you can save money, to boot.
If you’re eligible, you can get one of those 0%-interest balance transfer credit cards, onto which you can shift your high-interest debt, then pay it off before the introductory rate shoots back up in a year or more.
Or, you can get a consolidation loan, which merges your debts into one new loan, hopefully at a better rate than what you’re now paying.
In the Lone Star state, for example, consolidation and debt settlement are currently popular when it comes to Texas debt relief.
After all, many residents there, in this inflationary period, are increasingly relying on credit cards to make ends meet. Such high utilization rates are signs of looming financial woes.
Pick up a Gig or Side Hustle
In addition to saving where you can, you may need to find more income to make a dent in your debt. Do you have a hobby you enjoy?
Perhaps there’s a way you can monetize it. Or you can pick up a side hustle such as baby sitting, dog walking, or web designing. There’s an infinite number of ways you can pick up more cash.
Consider Cash-Out Mortgage Refinance
If you’re a homeowner with a good amount of equity and are eligible for a mortgage re-finance at a lower rate, you might want to go for a cash-out refinance.
With this approach, you can pull some cash from your home’s equity and put it on your debt. The rub here, though – and it’s a big one – is that if you miss payments, you very well could lose your home.
In all, if you follow any number of these tips to help you become debt free, you can once again enjoy true financial freedom.
That is, if you cut back on spending. If your situation is more dire, you may want to consider debt settlement with Freedom Debt Relief.
