Most people in the United States carry some form of debt. The average American has around $6,000 on credit cards and a student loan balance of over $30,000. Struggling with these expenses doesn’t have to be the new normal. Becoming debt-free means you no longer have to worry about living paycheck to paycheck. If you’re not sure where to start on your way to a debt-free lifestyle, these tips are a great way to get a handle on your finances:
Go Beyond Minimum Payments
Most Americans who carry a credit card balance pay only the minimum balance each month. That’s a way to keep yourself in debt, especially if you are adding to that balance each month as the statement balance continues to climb with interest charges. You can pay down any amount you owe faster by making more than the minimum monthly payment. Paying off your loan faster helps you save money on interest for the life of the loan, not to mention freeing yourself on what could be decades of paying down a credit card.
Create A Realistic Budget
Paying down debt faster means creating a realistic budget, with a key focus on sticking with it. A bare-bones budget includes essential expenses while cutting out the fat. You might be surprised how much you spend each month on restaurants, new clothing, or coffee before work every morning. Analyze the last two months of spending on debit or credit card statements to see where you can trim from your budget. You don’t have to give up all of your non-essential expenses as long as you can budget discretionary spending responsibly, which may mean putting all dollars leaving your account each month under a microscope.
Negotiate Your Rates
Do you feel like your interest rates on your credit cards or student loans are too high? That’s probably because they are! Whether you’re able to refinance loans in order to make your monthly payments lower, or your credit card company slashing APR out of good measure to keep your business, the additional savings can keep you afloat and provide a financial cushion each month.
Other monthly services like cable, internet, satellite, car insurance, and medical bills may be negotiated. Sure, it takes a little time and effort to speak with your creditors and possibly threaten cancellation, but if you have a history of paying on time, they could meet you in the middle.
Sell Your Stuff
Many people start worrying about their budget when they can no longer make ends meet. If you’ve found yourself in that position, you can drum up cash by selling items currently collecting dust around the house. Holding a yard sale is a great way to get rid of items locally. Alternatively, you can sell on sites like eBay or even listing on Facebook Marketplace can turnover cash quickly.
