If you’re one of the millions of people hemorrhaging debt, you’re not part of a small crowd. According to Pew Research, the average American is carrying $46,000 in debt. Some debt is even considered to be good debt – like a mortgage or student loans – because they represent investments that will grow in value over time. However, there is also bad debt, and credit card debt is about the worst, due to that old devil, compound interest.
The good news is that you can get out of debt fast using these realistic and proven strategies.
The first step is to make a list of your debts so you’ll know exactly what you have to deal with. The easiest way to do this is by using a spreadsheet like Microsoft Excel or the free Google Sheets.
Your spreadsheet should have five columns – the name of the lender, your balance, it’s interest rate, minimum payment required, and payment due date.
Next, prioritize them using one of two methods. The first is called the avalanche method. This is where you order your debts from the one with the highest interest rate down to the one with the lowest. You then focus all of your attention on paying off the debt with the highest interest rate as this will save you the most money.
The second method is called the snowball method. It’s where you arrange your debts from the one with the smallest balance down to the one with the highest. You then do everything you can to pay off the debt with the lowest balance. The idea behind this method is that you’ll get that first debt paid off fairly quickly, which should give you momentum to tackle the debt with the second smallest balance, and so on.
It actually doesn’t matter much which of these methods you choose, so long as you choose one, and get to work paying off a debt.
Use any windfalls to pay off debt
Into almost everyone’s life some windfalls come. This could be a raise, a bonus, an inheritance or a gift. If you’re trying to live frugally, you may be tempted to splurge – to use the money for a vacation, a new HDTV, or new furniture. Resist the temptation. Use the money instead to pay down or pay off a debt. You were able to live without the money before the windfall so you should certainly be able to live without it now.
Get a side gig
The people who are the most successful at paying off their debts almost without exception get side gigs. This could be starting an Internet business selling yours or other peoples’ products on eBay or Amazon.com. If this idea doesn’t appeal to you, you could drive for Uber or Lyft, where you could set your own hours. There are also some very simple site gigs like Field Agent. This is earning money by downloading an app and then doing research tasks such as visiting selected retailers to check out their customers’ behavior.
Invest in yourself
There are also big ways to increase your income. You could take courses and invest in books that would teach you how to start a profitable business. Amazon’s top-listed book in this category is “Start Your Own Business, Sixth Edition, The Only Start Up Book You’ll Ever Need.” There’s also “Starting A Business All-In-One for Dummies” and Amazon’s best seller, “Small Time Operator: How to Start Your Own Business, Keep Your Books, Pay Your Taxes, and Stay Out of Trouble.”
There are probably colleges or universities near where you live that offer courses nights or weekends that would teach you what you need to know to start and run a business.
Learn to negotiate
Believe it or not, you can negotiate almost anything from the price of a used bicycle to the interest rate on a credit card. You should also be able to negotiate with your lenders to get new repayment options or even to have your debt reduced. Contact your lender’s, tell them you’re having trouble paying them, and ask if they’d be willing to lower your interest rate, waive your payments for a few months or even reduce your balance. All they can do is say no.
Hire a debt settlement company
A good debt settlement firm like National Debt Relief should get your debts cut by 40% or even 50%. Plus, you would then have just one payment to make a month versus the multiple payments you’re currently making. While debt settlement companies charge for their services, you will still save money by using one, and you will know exactly when you’ll be debt free.