If you’re like most people, you probably have some form of debt. Whether it’s from studying, student loans that need to be refinanced, car loans, a mortgage, or credit card debt, it can be stressful and cause sleepless nights when you have debt hanging over your head.
Getting out of debt can give you financial freedom, allowing you to enjoy greater opportunities throughout your life. But sometimes, the amount of debt you have can be overwhelming. Read on to learn how you can get out of debt this year.
Some debt is worse than others. For this reason, it’s best to pay off the debt with the highest interest rate first. This is often credit card debt and car loans. In order to prioritise your debt, you’ll need to make a list of everything you owe.
Once you’ve got your list, it’s time to look at which debt is most important to pay off. If you have a lot of credit card debt, you may want to look at consolidating it. Some banks will allow you to take out a loan with a lower interest rate so you can pay all of your credit cards off at once. Another option is to swap your debt to another credit card. Some banks will have low (or 0) interest rates for the first six months
Cut your expenses
Once you’ve got a plan of attack for paying off your debt, it’s time to tackle it. This means cutting out unnecessary expenses. Unfortunately, this will often mean less socialising and money spent on fun, but it’ll be worth it to be debt-free. If you have employees, you may want to talk to them about their financial situation as well (unobtrusively of course). Employee debt can lead to low productivity, and you may want to encourage the whole office to get involved with some frugal planning.
Now’s the time to look at ways that you can increase the amount of money coming in. Any windfalls like tax returns, inheritances, or increased income can go straight on your debt, to bring down that number.
Now may also be the time to start that side hustle you’ve been thinking of. Whether you have an idea for a small business you’d like to get off the ground, you want to begin freelancing part-time, or selling hand-made items, there are plenty of ways you can create multiple income streams and get your debt paid off faster.
Cut up the cards
Once you’ve paid off your credit cards and paid off your loans, it’s time to close accounts and cut up cards so you can’t get back into the same debt. The last thing you need to do is to live outside your means and rely on credit cards to pay your bills.
Create a savings goal, so you have an emergency fund and you’re covered if the car breaks down or you have another issue. This will help keep you out of debt in the future.