Debt is not enjoyable. It will weigh you down in many ways. For example, if you want to go on that vacation you have dreamed about, you’re going to think twice. And when you want to put that extension on your home, you know it’s not realistic. Debt can impact your life in much smaller ways as well, including staying at home to eat every night opposed to going out to eat once in a while. This debt problem must be fixed. Here is how to fix it.
Reduce Spending
If you’re like most people, then you spend money on the movies, bowling, miniature golf, eating out, and things of that nature. Without realizing it, you’re probably spending at least $500 per month on food and entertainment. Promise yourself that you will take a three-month break from this kind of entertainment and apply that money to your debt. If it’s credit card debt, $500 per month will help you get your credit card debt under control. You might think this means no entertainment, but that’s not the case at all. You will be entertaining yourself in different ways. This might include a free concert at the park, a walk on the beach, going for a hike in the mountains, or having a picnic by a waterfall. All of these things are free. The best part is that they will all be more memorable than the entertainment options in the paragraph above.
Other ways to cut expenses include brewing your own coffee at home, cutting your cable, using the library for free books and movies, canceling your gym membership and working out at home, or taking out a personal loan to pay off your debt at a lower interest rate. With loan options available to you in the matter of seconds, you can pay off high-interest credit cards while having a lower monthly payment and overall interest costs over the life of the loan to not only payoff sooner, but use your savings for building your nest egg.
Boost Your Income
Plenty of people will think they don’t have the skills to boost an income with a side hustle, but if you own a car, then you can earn more money by driving for a ridesharing company. You can then use this income specifically to pay off debt. You can drive a few nights per week and/or on the weekends. However, if you live in the city or you don’t travel with your car much, sell your car. That will be even more productive because you will be able to pay off a huge chunk of debt in one shot. You can then walk, bicycle, take advantage of public transportation, or use ridesharing programs to get to where you need to go. Also keep in mind that you will be cutting car insurance. If neither of those options appeal to you, consider writing, buying and selling items online, or creating and selling products or services.
Another Option
There is one other option that is highly effective. This strategy is often overlooked but that should never be the case. Always pay yourself 10% first from every paycheck. This means 10% of every paycheck goes straight to debt. This might not sound like a lot, but you will be pleasantly surprised by how fast you pay off that debt. The best part about this strategy is that it forms a good lifelong habit. Once your debt is paid off, you can start putting that 10% in your savings account. Once again, you will be surprised how fast it adds up.