How to get rid of debt fast and what is the best way to eliminate your debt? These questions are constantly popping up in the mind of those with debt. Of course you want to get rid of debt as fast as possible, but many people run into the challenge of doing so effectively. The best thing to do is to find out what others have done and figure out how to make it work for your goals. It will get easier to eliminate your debt when you know what your options are.
Here is some of our expert financial advice, compiled and tailored for our readers willing to turn their financial situation around and eliminate debt quickly in 2017.
1. Increase minimum payment amount
Paying the minimum amount due can take forever in getting your overall balance to go down. Pay more than the minimum on credit card balances, even if it is just $25 extra a month. There are financial calculators available online to help you calculate how long it will take to make payments based on what you can pay.
Making more than the minimum in some cases can help keep interest rates low and reduce your debt faster.
2. Spend under your limit
People often want things they can’t afford. In many situations, they will get that “thing” and realize soon after they can’t afford it. Think about the pay you take home each month and make sure you are not spending more than what you earn. Don’t buy something you want unless it is something you need. That’s a rule of thumb when it comes down to how you can eliminate credit card debt quickly.
A great way to exercise spending less is to use cash instead of credit cards. Studies have shown people will spend less money when they have cash on hand, and spend more when using a credit card to cover purchases. Try to avoid using credit cards until your financial situation improves. This will help you tremendously in eliminating credit card debt in 2017.
3. Make high debts first priority
This tip on how to get rid of debt quickly in 2017 is one of the most difficult to follow but at the same time, it is one of the most important.
Which debt carries the highest interest rate? Work on paying this one off first. When making payments on multiple accounts, it helps to make minimum payments to keep them in good standing. But, you can make an exception for one and make more than the minimum to get out of debt faster.
Pay off the most expensive debt first, then, use the money you were making payments with to pay off the next highest debt on your list. Keep the pattern going and you will be left with the least expensive debt last until you get debt free.
4. Purchase used instead of new
If you are in the market to purchase a vehicle, consider getting a quality used car instead of a brand new one. Finance experts say buying new doesn’t always add up. You could get a new car for $24,000 and in a few years, it may only be worth about $13,000.
There is nothing wrong with buying a new car, but it helps to do your homework first to get the most out of your investment. Try to keep the vehicle for several years and choose a reliable car that’s good on fuel. Following this tip will help you get out of debt quick.
5. Use one car
Families with more than one car could minimize car costs by reducing to a one-car household. It is one of the effective ways to get out of debt.
Can you walk or bike to work? Public transportation such as the bus can be cost-effective. Studies have shown many households spend close to $10,000 annually just to own and maintain a vehicle. Getting rid of a vehicle or cutting back using it can create more money to put toward eliminating debt quickly in 2017.
You don’t have to give up the car right away, but you can give the idea a test drive. Try to go about your day without using the car. Walk, bike, carpool, or take public transit. You could take a taxi every now and then and still save money. Testing the idea helps learn how much you can save. You could save as much as 80% if you decide to take public transit on a regular basis if you sell your vehicle.
6. Take advantage of savings when grocery shopping
People often look for savings when shopping for groceries, especially if they have a large family, or when they are on a budget. In this case, it is no different but there are a few things you can do to help limit how much you spend while making your dollar stretch towards reducing credit card debt in 2017.
Look for sales on items you commonly buy each month. Stock up on items when they are on sale and think about items with a long shelf-life such as cereal, pasta, and soups. Stock up your freezer with meats and other things that can go in the freezer.
7. Earn more money and stay persistent paying down debt
One of the best ways to eliminate debt in 2017 is to find a way to earn extra money. You can do this by getting a second job or generate extra income based on personal interests. This will require more time and energy on your part, but if your efforts remain consistent, your debt can be eliminated sooner. Just remember this is temporary, and you can go back to your regular schedule when your debt is paid.
Making money with your skills is a flexible option. You can choose when to complete the work and the type of work to do. You can be a freelance writer if you like writing. You can walk your neighbor’s dog or offer to cut the lawn. If you like arts and crafts, create something people will find useful. If you have extra space at home, consider renting it out.
8. Know where your money is going and how to scale back
Some people have no idea where their money is going each month even though they pay bills and take care of expenses. Get a snapshot of what you spend each month by reviewing your monthly statements. Save receipts from shopping and other purchases to help add up the total cost. Knowing where your money is going will definitely help you to pay off debt quicker in 2017.
You may be surprised where your money is going and why you end up being broke sooner than anticipated. You can use a monthly expense tracker or a spending. Be honest with yourself when reviewing your monthly spending, or you won’t see progress when developing a plan to help you cut costs.
9. Seek loan or debt consolidation
Banks and credit unions offer options to help consumers consolidate debt, which is one of the most convenient ways to reduce debt quickly in 2017. You can get a loan that will consolidate your debts into one payment at a low-interest rate. Many find this way to be easier to make payments each month.
To increase chances of using a debt consolidation loan successfully and get out of debt fast in 2017, plan ahead. Have a budget or a spending plan for monthly expenses. Consider having funds set aside for emergencies or unexpected events.
10. Do you qualify for mortgage refinancing?
Qualifying homeowners may be eligible to use the equity in their home to pay down debt quick in 2017. Keep in mind that mortgage insurance may increase if you have little equity. You can review this option with your lender or financial advisor before applying. Lenders may be willing to work with you, but it helps to get familiar with the process first elsewhere.
This option is similar to debt consolidation loans, except you consolidate debts into your mortgage. It is suggested to create a budget to control spending. With this option, you may end up borrowing more than you need, and you don’t want to use up all the equity. You can work with your bank to set up a payment schedule, based on when you get paid.
11. Seek free credit counseling
This is a common option for anyone that may be on the brink of bankruptcy. Of course, you don’t have to be in deep financial trouble to utilize the service. No matter your financial situation, you can review options with a qualified credit counselor. There are different debt reduction programs available for different situations to remedy debt.
It is a good way to learn about programs that require monthly payments to settle debts. You can do this anytime with a qualified non-profit credit counseling service, and your information remains confidential.
12. Develop a budget
Many people don’t like the word “budget,” but it is something you need to do if you are serious about getting out of debt in 2017. Look at this as a spending plan or a way to help you spend your money without overspending. It keeps debts and expenses in check while encouraging you to spend only what you have.
If you create a budget right for you, it will make debts easier to eliminate. There are a number of online sources, such as budget calculator spreadsheets, that are free to use to help you create a budget. There are also smartphone apps that help you keep your spending plan at your fingertips.
Conclusion: How to eliminate debt in 2017
Debt won’t go away on its own unless you take proper steps to handle it efficiently. Waiting only puts it off, and you probably can get it paid off sooner than you realize. You are already off to a good start when you take steps to learn about options available to help you get out of debt in 2017.
Still looking for more? Feel free to check out our comprehensive personal finance guide to learn more about managing your budget and staying financially healthy.