10 Insanely Actionable Debt Elimination Tips
It's in your best interest to get rid of any and all debts that you might have as soon as possible.
Here are some tips for doing that:
1. Rank Debts From High To Low
Prioritize your debts according to which incurs the most interest. If you have high interest incurring short-term personal loans, or small loans that you can pay off easily, rank these high on your list of which debts you should pay off first.
As a rule of thumb, you should pay off high interest loans first. If you have secured loans like a mortgage, you can temporarily move them down to the list and make only the minimum monthly payment. However, don't forget that you do need to pay off low interest loans eventually, too.
2. Make a Budget
The hard stuff comes first. If you truly desire to pay off your debt, you will need to make a budget to track your expenditures and compare spending against income.
Once you have written down where to spend your money, you will be able to easily see which areas cost you the most, and which areas, like debt, that require money.
With a budget, you can cut back on inessential expenditures, like going to the movies for example, and allocate those funds towards paying down your debt.
3. Set Goals
Sit down and write down your goals for paying off debt. For example, you can make a goal to pay off your mortgage in 5 years or to eliminate all credit card debt in a year.
This list should go up on the refrigerator or someplace else where you can see it every day. Don't lose track of these goals and do everything you can to meet them.
You will also feel greatly satisfied and motivated when you tick off each goal one by one.
4. Be Frugal
You will need to be thrifty and frugal as much as possible to eliminate your debt. The math here is that you need to decrease your expenditures to make more funds available to pay off debt. The worse the debts are, the more frugal you will have to be. Cut back on all inessential expenses such as entertainment or shoe shopping.
You will have to replace costly but unnecessary expenses like going on vacation or going to the movies with free inexpensive alternatives such as visiting friends or picnicking at the public park. Don't worry; it won't be like this forever once your debts are paid off.
5. Automate Payments
If you are one of those people who easily forget to make the monthly payments, you can automate transactions with your bank so you never overlook a bill. You can easily set up automated transactions to pay the monthly utility bills and the mortgage bill.
6. Sell Old Things For Cash
Making the minimum payment each month does not reduce your overall debt. If you can come across a wad of cash suddenly, you can certainly allocate it towards reducing the balance of the peskiest loan you have.
The easiest way to make extra money with little effort is to sell old things at the house. Gather old toys or jewelry that you no longer need and auction them off online to make some quick and extra cash.
7. Get a Second Job
The best strategy to eliminate your debt is to increase your income and decrease your expenditures.
If you cannot get a raise at your regular job, the next best thing to increase your income is to get a second part-time or freelancing job.
Yes, it will be difficult and will tire you out. But be strong for several months until your debt is paid off.
With the additional source of income a second hand job provides, you can easily pay off your debts on time.
8. Consider Debt Consolidation
If you have a hard time keeping track of all the loans you have, it might make more sense to consolidate all these little loans into one giant one and pay a single bill each month.
However, this single bill will be considerable in size and you have to be able to afford it with your currently monthly income.
9. Get Extensions if Possible
Get extensions for all the loans that allow it so you have more time to get your finances in order.
For example, if you can get an extension on a student loan, you will be able to use that time to pay off a payday loan.
Consult a personal finance expert and see if it's possible to sue to write off at least some of your debts.
If you have short term personal loans that keep getting automatically renewed each month, you may have a chance in court to get rid of these.
You will have to consider lending laws in your state and then file a lawsuit to reduce your debt burden.
Remember, you will have less legal leeway with conventional loans such as your mortgage.
You can do anything if you set your mind to it, including paying off debt.