Being in debt can be very depressing. In the United States the average debt is more than $15,000. A lot of people are living month to month with very little left out of their paychecks because of their debt problem. We are going to show you how you can get out of debt fast using 7 proven tactics.
Can you imagine how great it will feel to live debt free? It’s a great feeling knowing that you do not owe anybody a single cent and it is certainly possible to go from a position of debt to a debt free position. You need to be smart and follow the proven tactics in this article.
1. Get out of Debt Fast by knowing your Debt Position
You need a plan if you are going to get out of debt fast. That plan starts by knowing what your debt position is right now. You may be fearful of knowing just how much debt you have or even have feelings of guilt. You have to overcome these things and take action.
The best way to understand your current debt position is to use a spreadsheet to record everything. You need to include credit cards and any loans that you have. Your credit card companies will tell you the amount that you owe and the applicable APR. So be sure to record this.
If you have loans then your lenders will tell you what is outstanding as well. It is important that you can see the whole picture. When you first look at the spreadsheet and realize how much debt you are in it might depress you. But always keep this in mind:
- There will be a lot more people that have a much larger debt problem than you do
- Starting today you will be reducing your amount of debt
2. Take a Look at your Income
OK in order to get out of debt fast you will have to pay more than you usually do to clear credit card balances and loans. You need to work out how much you can afford to pay each month with your current income.
If your current income does not provide you with a lot of scope to pay more then you need to find a way to increase your income. Can you get a promotion or a raise at your job? If it is possible for you to work another job then look into that. What about a part time business that you can work from home to provide you with the additional income that you need?
3. Get out of Debt Fast by making the right decisions
You need to make important decisions about which debts you will tackle first. You have to prioritize your debts and drive down the debt that comes with the highest rate of interest first. This is likely to be a credit card but you need to check.
If you have two credit cards that have outstanding balances and one has a higher interest rate applied to the balance than the other tackle the higher interest rate balance first. You can continue paying the minimum balance on the other card until you have paid off the higher interest rate balance. Then start to reduce the balance on the second card.
Debt reduction is all about paying more than you need to. If you have a loan over a specific period then you can save a lot of money by paying more than you need to every month. Most lenders will accept this but always check with them first.
An alternative strategy is to use the debt snowball method.
4. Why you should consider the Debt Snowball Method
Here you will get out of debt fast by starting with the smallest debt and making your way up to the largest one. Identify your smallest balance and pay as much as you can to get rid of this in the shortest possible time.
After paying off the smallest balance move on the next smallest and pay that off. By getting rid of these smaller balances you will create a snowball effect that will free up more of your available income to really tackle the larger debts you have. While you are paying off the balances you must keep up the minimum payments on the other debts.
There is an important psychological gain here. As you knock the smaller balances down your subconscious mind will register these as wins. This will keep you motivated to clear all of your debts eventually.
5. Get out of Debt fast by only spending on the essentials
Examine your current spending habits. Do you eat out often? Do you always buy an expensive coffee on the way to work? Do you have membership subscriptions that you don’t use? You have to live of course but most people spend money on things that they don’t really need.
Open up a spreadsheet and record everything. Obviously you need to pay utility bills, repayments on loans, grocery shopping etc. Create a budget to abide by each month. Have a look at your spend in the grocery store. Are you making unnecessary purchases there?
6. Sell stuff you don’t need
Everyone has stuff that they don’t use any more. Dig it out and sell it. If your old things need a clean and polish then put the effort in to do that. Have a garage sale or sell items on eBay or similar websites to raise extra money.
7. Get out of Debt Fast by removing Temptation
Stop using your credit cards right now! If you still have credit cards then get rid of them so that you are not tempted to use them. Instead of cutting them up ask a friend or family member to hold on to them for you. You may need to use one in an emergency as you never know what is around the corner.
Get out of Debt Fast by taking Action right now
If you want to get out of debt fast then take action right now. Start by recording your current debt position on a spreadsheet. Tackle the highest interest balance or use the snowball method. Do what you can to raise extra money.