Life can be very stressful at times especially in the world we are living in. the last year and a half has been a game changer with the ongoing Covid-19 pandemic. Anytime you are dealing with your health, that adds even more stress to your life. If you’re a parent, that’s even more stressful seeing that the kids have started back to the school. If you don’t have control of your finances, this will add even more stress to your life. It has been reported that a whopping 80% of Americans are caught up in a chain of debt. Once upon a time, my family would be included in the Americans that’s caught up in debt. With the pandemic, we didn’t buy much and focused on eliminating debt. Below you can see how to take control of your finances once and for all.
Keep An Eye on Your Spending
The first thing you probably want to do is see where all your money is going. For years, I’ve used my Notes App to keep track of my spending. My calculations are separated by the actual bill, amount, and due date. You could also do it by keeping track on a worksheet, notebook or one of many money apps.
Once you’ve tracked your spending, it’s time to create a budget. By using your regular spending as a guide, this budget should account for all of your needs. One of the first things we were able to eliminate was the constant eating out. The times we were spending $50, $100, or even just $25 could be put to better usage. We also saw that we were spending a lot of money on monthly services that weren’t that important to have like multiple music services. For you, the goal to get out of debt fast is probably your #1 priority, but don’t forget building an emergency savings fund as well.
Figure Out a Way to Pay Off Debt
You are starting to develop a plan by keeping track of your spending and creating a budget. If you have some debt, you will need to find a way to clear it. One of the quickest ways to get rid of debt fast is by using the “debt snowball” approach. What is the debt snowball method? This strategy calls for you to make minimum payments from your monthly debt payment fund to all but one of your debts. This specific debt will get more than the monthly required amount and will be paid off quicker as a result. When that debt is paid off, you choose another debt and reallocate all of the extra funds toward it. Keep repeating this process until all debts are repaid in full.
Pay More Than the Minimum Payment
If you’re trying to figure out how to get out of debt fast, you should try to put as much as you can toward debts every month. Remember the debt snowball method – every chance you have to make higher payments will bring you closer to being debt-free. If you are trying to pay off your auto loan, try paying half the bill every two weeks. If you have extra money, you can pay it on the principal only as it will help in the long run.
Balance Transfers & Debt Consolidation
If you’re overwhelmed with too many payments and not enough income, you might be considering a balance transfer or consolidating debt to get rid of your extra payments quickly. Transferring your credit card balance may give you a 0% introductory rate for a while, but transfers often come with an up-front fee. If the introductory rate only lasts for 12 months, you would have to pay the debt off in full before the year is up. Debt consolidation loans might sound like an even better idea, but consolidating can leave you worse off than you started. At this point, you will try anything as your focus is getting out of debt.
Renegotiate With Credit Card Company
One thing many people don’t realize is you can renegotiate your credit card contract. Instead of continuing to pay those high monthly payments, you could pay a lump sum. All you have to do is ask, plus they can either say yes or no. Give your creditors or lenders a call and request a lower interest rate on your credit cards. As long as your payment history is good, you have a chance of getting some relief. You could also call about your insurance, electricity, cable or phone bills. For me, I’m on budget billing with my electricity company where I pay the same amount every month.