How To Get Out Of Debt Fast

Last Updated: October 24, 2017 in Loans • 

Getting into debt over-your-head can happen to anyone. And, maxing out your credit cards is probably not what you would do if your circumstances were different. But, sometimes all it takes is a sudden illness, accident or job loss to push you over the edge and force you to use credit just to meet your daily living expenses. Whatever the cause, being in debt is stressful and overwhelming.

Eliminate it as quickly as possible to get your life back on track! You’ll need to have a two-pronged approach that involves changing your lifestyle and spending habits and searching for the best and fastest way to pay off the debt you currently have. While some of the suggestions below may seem rather obvious and straightforward, you’d be surprised how many people fail to see how much money they are wasting by not implementing them.

Stop Using Credit Cards To Fund A Lifestyle You Can’t Afford

Literally, take the cards out of your wallet. Then, take a good look around you. You probably own almost everything you really need already—enough clothes, furniture and a functioning car to get you through at least a year.

  • Don’t purchase anything new for now and try to focus on only using cash to pay for necessities
  • Put any extra cash towards eliminating debt and always pay more than the minimum balance due each month on any credit cards you have
  • Walk right past all those sales people pushing in-store offers to open a new account for a 10% discount that you can find online anyway
  • Consider applying for a debt consolidation loan to help you reduce your monthly debt payments

Make A Budget

Most people have only a general idea about where and how they spend their money. It is even harder to know where your hard-earned money goes if you use a credit card for every purchase. Take time to go through your bank and credit card statements each month to add up how much you’re spending on frivolous purchases.

Making a budget will help you to understand if you can really afford what you’ve been buying. It forces you to acknowledge that perhaps, you don’t need to make all of those stops for coffee or happy hour cocktails. Look carefully at your statements to honestly evaluate wehre you can cut expenses.

Increase Your Income

If you do not have enough income to pay your bills and your expenses each month, you have to find a way to increase your income, even temporarily. For most people, getting a second job or selling some household items helps to quickly generate income.

Put all the extra income toward paying off your debt. Once it is paid-off, you can eliminate your monthly credit card payment from your expenses. You’ll have also become accustomed to living on less and won’t be tempted to run up your credit card again any time soon.

Decrease Your Expenses

As difficult as it is to try to find new sources of income, cutting expenses for things you take for granted as necessities is almost harder. You work hard for what you have already and it’s easy to feel like you “deserve” a night out at a restaurant once a week.

But eating at home is one thing that can add a lot of money back into your budget right away. Try thinking about what a good substitute might be and remind yourself that it is only temporary. While you don’t want to go back to bad spending habits after you eliminate your debt, you will be able to budget better for an enjoyable and affordable evening out.

Restructure And Organize Your Existing Debt

Organizing your debt means understanding what it is, how much you owe and what the repayment terms are. If you can sort out all of your debt, you’ll be able to see how much it is really costing you to not pay it off. You can choose to pay off the credit cards with the highest balances first or choose to pay off the credit cards with the highest interest rates. Once you pay off a card, do not close it. Instead leave it open and don’t use it. Closing it will negatively affect your credit rating.

Restructuring your debt means working with the lenders to pay it off on better terms. It never hurts to call your credit card company to see what they can do to help you. It is in their best interest as well to help you to pay off your debt. Depending upon your situation, they may waive finance charges or penalties, freeze interest rate increases or allow you to make a lower minimum monthly payment for a period of time.

Make Extra Payments On Your Debt At Every Opportunity

Whether you choose to pay off the high-rate cards first or the high-balance cards first, always put any extra income you get toward a payment. Sometimes, extra money just comes your way. You might receive a gift from someone for a birthday or anniversary, you might find $10 in the pocket of your winter jacket from last season or, perhaps you’ve received a refund for an overpayment on another bill.

Instead of running off to spend it at the coffee shop, stash it into your checking account and immediately make a payment on your credit card balance. You don’t need to wait until the bill comes at the end of the month. Your lender will accept a payment any time during the billing cycle.