7 Ways To Get Out Of Debt Quick
When you're in debt, it can seem like a mountain too high to climb. The overwhelming feeling of facing the giant can stop us from taking action even before we ever really get started. But there is hope. It is possible to scale the mountain, slay the giant, and get back on solid footing, debt free. The freedom on the other side is well worth all the hard work.
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Here are 7 ways to get out of debt quickly.
Stop accumulating more debt
This one seems like a no-brainer, right? You would not keep digging a deeper hole while attempting to fill in that hole, would you? So why would you continue to charge more on your credit card when you are trying to pay down on said credit card? Why would you take out another loan for any reason when you haven’t paid back on existing debt? You must commit to stop taking on more debt and pay cash for everything until you can pay off what you already owe.
Save up a small emergency fund
But emergencies come, right? And sometimes you will not have cash on hand for a large, unforeseen expense. This is why it is wise to begin your “get out of debt” process by first saving up an emergency fund of about $1,000 or so. That will cover a decent amount of things like needing new tires or brakes on a vehicle, or a trip to urgent care for one of your children. Do you have something upcoming that will cost more, or are you concerned that $1,000 might not be enough? Then save up a little more if you want to be on the safe side. But an emergency fund is just that: for emergencies only. This is not for luxuries or things that can wait.
Stop spending like you are in Congress
Congress thinks they have the leeway to spend way more than they bring in via income. You should not follow their example. You probably fork out money for a lot you do not need and cannot afford on a regular basis. That twice daily Starbucks trip? Buy your own beans and brew your own coffee. Eat out every day for lunch? Brown bag it or hit the dollar menu at your favorite fast food place. Like to shop for expensive clothing regularly? Consider whether this is a luxury and assess if you already have enough clothes to get you through until you get out of debt.
Get on a written budget
This might be the most important step to getting out of debt. If you aren’t telling every one of your dollars what to do every month, chances are you have no idea where all of your money is going. A budget is a written agreement with you and your spouse on what you are allowed to spend money on and how much. The key here is to make sure you are paying all your bills, taking care of family necessities (not luxuries or things you can go without), and making minimum payments on all your unsecured debts.
The key to a written budget is that it must be followed. You may find you aren’t good at budgeting at first. Give yourself permission not to get it 100% right as you are trying this out. You will get the hang of it in a few months. Anything you do that is important will take a bit of discipline, and it’s no different with budgeting. Once you have a budget and stick to it each month, you will feel like you have given yourself a raise because once you are only spending money on necessities, you will find you have some left over that you can put toward paying down that debt.
Debt snowball method
This method for paying down debt was made popular by world-renowned financial guru Dave Ramsey. It’s really simple to follow. You list all your debts smallest to largest. You make minimum payments on everything and throw all the extra money in your budget at the smallest debt until you pay it off. Then take all the money you were paying on that debt and put it toward your next largest debt. It’s called the debt snowball because as a snowball rolls down a hill and gains momentum it gets bigger. And that is what you are doing here. You are gaining momentum with each debt you pay off and are enabling yourself to pay more and more toward each debt. Don’t forget to include credit cards, student loans, personal loans, and car payments in this debt snowball. With each thing you pay off you will gain confidence that you really can reach your end goal of being debt free. Don’t give up, you can do this!
Sell stuff you don’t need
You may have some high dollar items that you really don’t need at this point in your life. Why not sell some of that to help relieve yourself of some of your debt? Why not have a garage sale? Average earnings from something like this are in the $500-$700 range but depending on what you are willing to get rid of, you could net even more! Be creative here. If you aren’t really using it and can make money on it, why not do so and pay down that debt faster? You can even sell larger assets like automobiles, quads, boats, etc. if it is more important for you to pay down on the debt you owe than to have that stuff.
Figure out ways to earn extra cash
This could be as simple as picking up some overtime shifts at your current job. You may want to find a second job working weekends in your field. You can also decide to deliver pizzas or wait tables on the weekend, which could bring in some serious cash. Gig economy jobs are hot these days. Become a part time Uber driver or Doordash delivery person. If you are really good at providing a service you may want to do some form of consulting (personal trainer, wellness coach, etc). It’s pretty easy to sign up to sell Pampered Chef or other party-driven commodities. There are so many opportunities out there to earn extra cash to help pay down that debt. Think of something you would like to do (or at least something you don’t hate) and get after it!
No matter what method(s) you choose, get focused and intense about paying down that debt. You can do it! And you will feel so much better after you are done. Now YOU get to say what happens to your money, not your creditors. With that newfound freedom, you should treat yourself to something special, like a vacation or something fun for the family. Paying off debt takes discipline but in the end it is worth it and the habits you form could last a lifetime.
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By Steven Banks, Financial Coach
If you are ready to begin getting out of debt and you’d like some help along the way, email Steve at BanksFinancialCoaching@gmail.com to set up a free consultation call.
Next Step Resource:
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