There is no better time than now to start getting out of debt. Even if you have a large amount of debt, there are many ways to climb out from under that burden and end up on top. Following these smart money habits, you will be out of debt quickly and painlessly!
1. Shift Your Spending Habits
The first way to get out of debt is to stop accumulating debt. If you are constantly spending on your credit card or buying things that you cannot afford, your debt will continue to grow. Take a look at what you are spending your money on and try to shift it toward smarter, more financially savvy methods. Rather than buy brand name, try generic products. Think twice before you buy those new clothes that you may not truly need. With every purchase you make, assess if it is a necessity and, if it is, think about how you could make that purchase cost less. Less spending will instantly lead to less debt!
2. Make an Automatic Savings Account
If you only have one bank account for all of your finances, you may find it hard to save money. Your paycheck gets deposited, you pay your bills and then you see that you have $500 left — that doesn’t mean you should instantly spend that extra $500! Seeing that excess money in your account can be dangerous and can cause you to overspend and go into debt. Instead, set up another savings account and have some of each paycheck automatically get deposited into the new account. When the money goes toward savings without you having to think about it, you will save more and be able to pay off debt faster.
3. Consider Using Loans
If you have debt that is compounding at a high-interest rate, you may want to consider taking out a loan that has a lower interest. Small loans will get you money almost instantly which you can then use to pay off that high-interest debt. While you will still have a debt payment, it will be much more manageable and you will save money over time by paying a lower interest rate on that debt.
4. Pay High-Interest Debt First
If you have multiple debt accounts, take a look at each and see which one has the highest interest. If possible, take out lower rate loan and consolidate that debt. Or, make monthly payments that are more than the minimum due to those higher debt accounts. Focus on paying the most expensive debt first in order to save money in the long run.
5. Use Cash
When you go to make a purchase, try to pay with cash as your primary form of payment. This will ensure that you do not put more debt on a credit card and help you work toward getting out of debt. Start the habit of having cash on hand for all your purchases rather than reaching for that plastic! After all, you can only spend as much cash as you have!
These five tips may seem simple but they will have a big impact on your financial state, helping you get out of debt by simply developing better money habits. So assess your finances, try using quick loans to help with your debt or simply pay for everything with cash- you will be debt-free soon!