These days, many people are struggling with high debt balances. Managing these balances can be extremely daunting, and the prospect of paying them off can feel nearly impossible when you consider just your day to day needs alone. However, there are some key actions you can take to ease the burden of debt. Continue reading to learn five key strategies for paying off debt.
MAKE A BUDGET AND ADJUST ACCORDINGLY
First and foremost, get yourself organized by developing a budget. This will allow you to see where you are spending your money month to month. You can categorize your spending into different buckets, such as food, clothing, transportation, rent / utilities, and so on. From there, this will allow you to see where the majority of your money goes and where you can potentially cut spending to redirect funds toward paying off your debt.
For example, perhaps you notice you are spending a lot of money on takeout. One change you could make is to cook your own food more often and instead use the extra cash for paying off debt balances.
HALT THE CREDIT CARD USAGE
If you have the ability to, stop spending money on your credit cards. After all, you are trying to pay off your credit card balances, and the last thing you want is to continue adding to your outstanding balances. This is particularly the case if you find yourself spending more money on unnecessary items when you have a credit card. By halting usage, this will help to lower your credit utilization, which is beneficial for your credit score.
BRAINSTORM A PAYOFF STRATEGY
Once you have created a budget and stopped using your credit cards, you should brainstorm a payoff strategy that you think is feasible to stick to. Perhaps you want to start with the higher balances and then go to the lower balances (or visa versa). Whichever you choose, having a set payoff strategy can help guide you toward more attainable and less daunting short-term goals.
PURSUE A SIDE HUSTLE
Another great strategy, particularly if you are struggling to come up with the funds necessary to begin paying off debt is to pursue a side hustle. There are countless number of side hustles you can start based on your existing skillset and interests. These might include things like freelance writing, tutoring, food delivery, and more.
The great thing about side hustles is that you can do them on your own time while still maintaining another full or part-time job. They can provide just the right amount of extra income to help you begin paying off debt balances.
CONSIDER DEBT CONSOLIDATION OR DEBT RELIEF
If you are really struggling, even when employing the strategies listed above, then you may need to look into other options. One option is debt consolidation, whereby you can either take out a loan or do a 0% interest balance transfer to roll all of your outstanding debts into one. Typically, this rolled up debt will have a lower interest rate overall, which can help you to stay better organized and cost less in the long run.
The last resort option would be debt relief. This is the case when your debts have simply become way too much to handle. With debt relief, you can declare bankruptcy or pursue a debt management plan with a credit counseling agency. However, if you can feasibly pay off the debts on your own, then you should do what you can to avoid having to pursue debt relief.