Many American families are struggling with debt. In the years since the COVID-19 pandemic, the number of people wrestling with debt as they try to recover from the financial fallout has been startling.
What can you do if you are one of these people?
Here are ten tips to work toward paying off those lingering debts and getting yourself and your family back on the path of financial stability:
Nobody really enjoys paying off debt. This is especially true when the total you are paying down is large and you must make major adjustments to your lifestyle to afford the payments. It can feel restrictive and stressful – and that often results in people avoiding the process as long as possible.
The best way to change this is to give yourself incentives to repay your balances. Celebrate your accomplishments along the way, acknowledge your own hard work on social media, or consider making a game out of paying off your outstanding balances. Looking for ways to make the process more fun and enjoyable can keep you focused on the goal.
Many people who are dealing with unmanageable debt get there by using credit too frequently. If you are still actively adding to your debt by using credit cards, loans, and other lines of credit, stop! The most important step you can take in wiping out debt is not adding more to your balance. Pay on the spot for things you need – with cash when possible – or skip them for now.
Speaking of skipping expenses, there are plenty of things you can skip if you need to. A careful look at your everyday expenses will probably reveal many places where you are spending more than you need to be. One of the easiest ways to make paying off debt faster is to cut out these expenses elsewhere.
Try shopping sales or using coupons for groceries. Check out discount retailers for clothing or home goods and only buy these items if necessary. Consider thrifted or free items in your community for furnishings or electronics and use public resources like the library or community centers for entertainment.
Perhaps the best way to save money is to simply not spend it. If you skip weekly restaurant meals, coffee at the drive-thru, and trips to the movies or other outings, you may be surprised at how much you can save to put toward paying off debt!
Anyone can make a budget. If you have difficulty planning your finances, there are lots of online guides that offer free templates to plug in your regular expenses. Simply track your spending for 2-4 weeks to get a better idea of where your money goes, then make a smarter plan for where it should be going.
The real trick is sticking to your budget. Once you make that budget, do not allow yourself to deviate from it unless necessary. Medical expenses are an example of a necessity. Dinner with friends at a local restaurant? Not so much. Stay focused to stay on track.
Most people do not think of downgrading or downsizing their car or home as an improvement. But if you are making a monthly car payment that takes hundreds of dollars out of your account, you could be wasting money unnecessarily.
Consider selling your car and buying a used vehicle with cash. Consider relocating to a less expensive residence or even living with family while you pay down debt. Remember – this is a temporary way to live that can make a big difference to your future financial stability!
Investment may not be a priority for some, but others see it as the only way to secure their financial future. While working to dig yourself out of debt, though, it is important to prioritize paying off debt over all other unnecessary expenses. Yes, that even means tucking away money in retirement and other accounts. Once your debt is wiped out, you can go back to contributing to those accounts with a clear conscience.
You might not have the time or ability to get a second job, but there are many other ways to add income to your household. Consider selling items you no longer need. Make crafts, food, or other items to sell online or in local venues. Offer your time and talent in exchange for money. There are so many ways to boost your income today!
Did you know that making more frequent payments can improve your credit? While this may take a while to make a meaningful difference, many credit gurus suggest making payments twice a month instead of monthly – or even making debt payments weekly when possible.
This has two benefits. First, it can improve your credit by showing creditors that you are going above and beyond the basic requirements of repayment for your debts. Secondly, it also whittles that outstanding balance down quicker. The sooner you repay that debt, the less interest you will owe – and the more you save overall.
In addition to paying off debt more frequently, you should also prioritize making the biggest comfortable payments you can toward your outstanding balance. By putting more money toward these debts each month, you chip away at the balance quicker and avoid unnecessary interest.
Remember, the sooner your debt is paid off, the sooner you can stop worrying about it!
While no one sets out to file for bankruptcy at the beginning of their financial journey, it can be a useful step in creating the financial freedom you are hoping for. If you are struggling with paying off debt and cannot seem to manage on your own, it may be time to seek professional guidance.
That is something your bankruptcy attorney can help you with.
Whether you choose to file for bankruptcy or are simply looking for advice in the difficult process of paying off debt, the team at the Van Horn Law Group can help. Give our experienced team a call today to learn more and find out just how easy it can be to start down the path to financial freedom!
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