5 Legit Ways to Get Out of Debt Fast
Want to crush your debt — yesterday? Well, we can't tell you how to travel back in time ... but we can tell you how to create a more financially secure future, starting today.
Paying off your balances fast might sound like the impossible dream, but there are ways to do it. Here are five things you can do right now to get debt off your back.
1. Freeze your credit cards (literally)
The more you use your credit cards, the deeper the hole you dig yourself into. The problem is that credit cards are easy and convenient. So yeah, we get it — it can be difficult to cut them out of your life entirely.
But if you’re serious about getting rid of your debt, the first step is making it impossible to accumulate more debt. Canceling your accounts can work — but if you still want to have the credit available for emergencies, you could do something more creative to keep the cards out of your hands.
One effective strategy: Freeze your credit cards in a block of ice in the freezer. That way, they're there if you need them for unexpected expenses, but you'll lose the ability to make impulsive purchases.
2. Pay more than your minimums
Many credit cards and other types of loans (such as student loans) have minimum payments so low that they barely cover your interest. That's a big deal, because when you make your monthly payment, interest gets paid first and whatever is left goes to principal. Take a peak at your statements — you may find that you're barely touching your principal some months.
When you make only the minimum payment, your interest charges can escalate quickly. You can easily find yourself more in debt than you were when you started.
Don’t let that happen. Pay as much as you can afford each month toward your credit card minimums. If you can, double up on your normal payment—and you’ll get out of debt a lot faster.
3. Give yourself an audit
What areas of your life are too expensive? Where can you cut costs? And when you do, can you put that amount toward your loans instead?
Take a close look at your spending from the last three months — and find out where your money is going. Figure out what you can live without, and set up your bank account to transfer that amount toward debt payment instead.
This is a great tactic because you’re already used to spending that money — so you won’t miss it. You’ll just put it toward getting yourself out of debt quicker.
For some people, this might mean canceling streaming services like Netflix or HBO, and putting that money toward debt. For others, it might mean skipping the Starbucks or some other non-critical spending habit, and putting the average amount they save toward their loans.
4. Consider big changes
Targeting smaller expenses can help you find money you didn’t know you had that you had. But if you really want to make progress, consider a big change, like taking on a roommate or selling your car.
True, these can be big, difficult decisions — and not everyone can make them. But if you could theoretically pay off your loan in a year if you moved back in with your parents temporarily, would it be worth it? These questions are worth considering.
5. Consolidate with a personal loan
Consolidating means replacing multiple debt obligations with a single loan and a single interest rate. This can, in many cases, be a great way to score a lower interest rate and pay your loans off faster.
Replacing credit card debt with a personal loan is a particularly good strategy. Not only do personal loans carry lower interest rates on average than credit cards, but they also can give your credit score a boost. Why? Because installment debt, like personal loans, have a defined end date. Revolving debt, such as credit debt, can increase at any time and has no defined end date.
Paying off your debt fast may seem impossible—but that doesn’t mean it is. Consider all your options, give your finances an audit, pay more than the minimum whenever possible, and look into consolidating. Chances are you won’t regret it.
If you're considering a personal loan, we suggest checking out Citizen Bank. They're offering extremely competitive rates at the moment, plus they have several discount opportunities that could knock your rates down even further. Check them out here.