How to get out of debt fast?
Let’s start by defining debt.
What is debt?
Debt is any amount of money you owe to someone else or another party. Debt can come in several types: mortgages, loans, credit cards, and more. Essentially, any time you borrow money will result in a debt of some sort.
This post is about how to get out of debt fast.
7 Ways on How to Get Out of Debt Fast:
1. Increase income/decrease expenses
I know, I know, this is sounding like a broken record, but it really can be that simple. Can you pick up a side hustle or turn one of your existing hobbies into profit? That might be worth exploring as it could become something more sustainable in the long-term.
Take a minute to comb through your expenses and see if there are any places where you could improve. $5 or $10 here and there don’t seem like a big deal; however, recurring charges can quickly add up to $50. Before you know it, you could’ve used that money to chop off your debt.
2. Sell things you no longer need or assets
Sell things you no longer need or assets: chair you no longer use or shirt you no longer find fashionable? Sell them! This is a great way to generate some extra cash without the added effort of finding a side hustle. This way, you can clear some of your space while making extra $!
There are some great platforms you can choose to sell used items:
- Facebook Marketplace (furniture, any other miscellaneous items)
- Offer Up (furniture, any other miscellaneous items)
- Poshmark (clothing, accessories, etc)
- Mercari (home goods, clothing, accessories, etc)
- eBay (anything)
- & many more!
3. Negotiate
Depending on the type of debt you’re in, you may be able to negotiate. Medical bills, for example, are highly negotiable. It’s no surprise that the medical billing system is convoluted and confusing. Often times, they don’t tell you that just because you receive a bill from the hospital does not mean you have to pay the whole thing or all at once.
For example, you can call their billing department and express difficulty in repayment. Then, you can ask them for a more manageable amount you could pay. That, or you can request for a payment plan. However, if you opt for a payment plan, make sure that there is 0% interest.
4. Use cash/debit instead of credit
It diminishes the chance of overpaying. It’s much easier to stick with your budget when you’ve allocated a certain amount, and when you’ve used up the amount allocated, you’ll have to wait until next month!
5. Pay off high interest debt first
These loans end up costing you the most with the high interest rates. That’s why it’s advisable to tackle these loans first. The common high interest debts are credit cards, so you might even look into transferring the balance to a lower interest rate. However, if you go this route, be sure to do thorough research, understand any fees that may be associated with the balance transfer, and create a plan for how you’ll tackle the debt after the balance transfer.
Remember: just because you transfer the debt to a different card doesn’t mean it’s disappeared or taken care of. You have to come up with a plan or strategy to pay it off within a timeframe that’s reasonable for you.
6. Make a plan
Write down all the loans, interest rates, term, etc. Then create a plan based on the type of method you want to use. Check this post out for explanations on avalanche vs snowball methods.
7. Use any bonus or tax refund
Sometimes it’s challenging to carve out any additional part of your income to paying off debt when your paycheck is barely enough to cover your normal expenses. That’s why it might be helpful to use any bonus from a job or your tax refund to pay off debt. Since that’s not money you would’ve anticipated receiving, and it’s external from your bi-weekly paycheck.
There you have it, 7 ways on how to get out of debt fast! Interested in learning more? Check this post out for investing mistakes to avoid!
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