When you are in debt, it can seem impossible to envision a future without money worries, but that doesn’t mean it is not possible.
Debt is a massive issue in the United States, with an estimated 80% of Americans being caught up in the cycle of borrowing and struggling with debt. The average person in the US currently has $38,000 of personal debt, that is without the additional mortgage debt that most households also have to pay off.
Fortunately, even if you feel that your situation is hopeless, there are always ways in which you can improve your finances and get out of debt for good. You just need to be able to see them.
From consolidating your debts to earning more money, keep reading to discover four top tips for getting and staying out of debt.
Be honest with yourself
Yes, it is easier to bury your head in the sand and pretend that everything is ok when it comes to your finances, but this is the worst possible decision you can make. Debt will not go away on its own. You need to be completely open and honest with yourself and your partner about your finances, and then you can start to find a way to move forward.
To achieve this, you will need:
- Recent bill statements,including loans, credit cards,etc.
- Credit reports
- Your credit score – this will help you out with the next step
Consider debt consolidation
If you have many debts that you struggle to pay off each month, especially ones that are charging you a high rate of interest, you should look into loans for debt consolidation.
Just imagine how much easier, and less stressful your life would be if you only had one manageable loan repayment every month rather than multiple ones all coming out of your bank account on different days?
Further benefits of debt consolidation include:
- Lower interest rate
- Reduction in late fees
- Debt repayment plan
- Improve your credit rating
- Eliminate debt collection calls
Pay more if you can
If you have a credit card or personal loan, you should not, unless you have no other choice, pay just the minimum payment each month. In fact, this is the easiest and fastest way to stay in the cycle of debt for longer. If you are already paying a high level of interest, chances are that with a minimum repayment, you are only paying the interest and not any of the actual debt itself.
Instead, work out what you can comfortably afford and pay that every month. The same applies to your mortgage, car loan, and any other debt you have, always pay as much as you can afford.
Earn more or spend less
This may seem obvious, but in the end, paying off debt fast comes down to two simple principles. You either need to find ways to earn more money, or you need to cut down on your expenses.
If you would prefer to earn more money, you could look into the possibility of getting a side hustle, or two. Alternatively, if you want to spend less, look at cutting out any unnecessary expenses such as memberships, eating out, or expensive clothes.