Many people struggle with being in debt. It is a common money problem. Debts like credit cards feel overwhelming. But there are smart ways to pay off debts fast. This guide shares unique tips and tricks. The goal is to get free from debt. This brings money freedom and less stress.
Use Debt Snowball with Side Hustles
The debt snowball is a good way to pay debts. First, make a list of all your debts. Put the smallest debt first, then bigger debts after.
Start paying the smallest debt with extra money. Keep paying others, too, but focus on the smallest. When the smallest is gone, pay the next debt.
This snowball gets bigger as you pay more debt. It feels great to get rid of debts!
Getting side income can help pay debts much faster. Side hustles are jobs you do besides your normal job.
Some side hustle ideas:
● Driving for companies like Uber or Lyft
● Doing gig work like TaskRabbit or Fiverr
● Freelance work like writing, coding, or design
The extra money from side hustles goes right to debts. You can put all that side income on the smallest debt. This makes the debt snowball roll even faster!
Get Loans to Pay Off Your Debts
Some people get loans to pay off other debts. This can help manage payments better. But be careful with loan terms. People with good credit may get personal loans. These loans have decent rates and terms. They can consolidate high-interest debts.
People with poor credit may only qualify for bad credit loans. These have higher costs but still consolidate debt payments. If you need cash fast for unexpected bills, payday loans provide it. But interest rates are extremely high. Only used for emergencies.
Suppose you are receiving government benefits and need immediate cash. Then, same-day loans for people on benefits give cash the same day. This can help cover costs until your next check arrives. But rates are quite high so repay quickly.
Getting any loan to pay off debts can be helpful if:
● The new loan has much lower interest rates
● The monthly payment is more affordable for your budget
● It simplifies multiple payments into just one new payment
Only take out loans you can responsibly repay. Make sure the terms legitimately make your debt more manageable. Getting overloaded with loans can make debt troubles worse.
Leverage Windfalls and Bonuses
Sometimes, you get extra money that was not expected. These windfalls can go right to paying off debts. This helps debts go away much quicker. Bonuses from your job are a big way to get windfalls. When you get a bonus, put ALL of it on debts. Do not spend bonus money on anything else.
Tax refunds are another windfall that can crush debts. When you get your tax refund, pay it toward debts. A tax refund is your own money returning to you.
Other windfalls that can pay off debts faster:
● Inheritances from a family member passing away
● Rebates or refunds for purchases or services
● Gifts of cash for birthdays or holidays
● Money earned from selling valuable belongings
Putting big chunks of windfall cash on debts feels amazing. It is so satisfying to make a huge debt payment. Debts go down a lot with just one payment! The more windfalls you can put toward debts, the faster freedom comes. Seeing debts get demolished gives a mental boost. This motivates you to keep going until all debts are gone!
Debt Repayment via Gamification
Some apps turn debt into a game. These apps let you set up challenges to pay off debt. You earn points or rewards when you make payments. It makes paying debt feel like playing!
Some app ideas to try:
● Debt monster games kill monsters with payments
● Pay off debt by going on app adventures
● Race apps where you move along a track
You can also make your rewards for debt milestones:
● Treat yourself to a small splurge when hitting goals
● Do a fun activity after paying off a loan
● Give yourself a break from strict budgeting rules
Sharing your debt payoff journey can also help motivate you. Many apps have communities where people support each other. You can share successes and get encouragement. Being social with debt payoff makes it more fun. Friends can cheer you on and keep you going. You don’t want to let them down!
Gamifying turns a boring task into an exciting challenge. With rewards, games, and friends involved, you’ll look forward to paying debts.
Negotiate Better Terms with Creditors
If you have lots of debt, you can call creditors. Ask them for better terms to pay it off. This can make debt easier to manage. One thing to ask for is lower interest rates. High interest makes debt harder to pay. If rates are lower, more money goes to the actual debt.
You can also ask for longer repayment terms. This lowers monthly payments so they fit your budget better. It takes longer to pay off but is easier month-to-month.
Other things creditors may allow:
● Temporarily reduced or paused monthly payments
● Waiving late fees or penalties
● Settling for a lump sum that’s less than the full balance
Same-day loans for people on benefits can help in situations where money is needed fast. These offer easy access to cash in the instance where one is required in an emergency or any other situation. However, the interest rates tend to be high, and therefore, the loan has to be paid in a relatively short period to avert rising costs.
If you are unable to make minimum payments, creditors may include debt settlement in your plan. This means they agree on a settlement of a smaller sum of money than the total amount that is due and payable. It hurts your credit but clears the debt.
Zero-Based Budgeting to Pay Off Debt
A zero-based budget helps you get out of debt fast. With this plan, every single pound of income gets assigned a job. No money is left over or forgotten about. The biggest priority is paying off debts. A huge portion of your pay goes straight to debt payments. You may need to cut back on other spending to put more towards debts.
For example, you may cancel cable and streaming services. Eat out less and pack lunch daily. Buy generic foods and skip fancy brands. Any savings from cutting back gets applied to debt.
Necessary costs like rent, utilities, and insurance get funded too. However, discretionary categories can be temporarily eliminated to attack debts more easily.
Here are a few key areas to keep budgeting for:
● Groceries and fuel for transportation
● Minimum loan and credit card payments
● Health care costs like medicines
Every other pound goes towards paying extra on targeted debts. No cash is wasted on little splurges or treats until debts are eliminated. Review the zero-based budget monthly. Ensure all income is accounted for. Make adjustments if you overspent in some areas. Stick strictly to the plan.
This budgeting method intensely focuses all resources on debt freedom. It requires self-discipline and sacrifice for a while. But becoming debt-free will then free up more income for fun spending later on.
Conclusion
Many unique strategies exist for tackling debts efficiently. The best approach uses multiple methods together. This has the biggest impact on reducing debt. Combine things like windfall money, loans, negotiating terms, using apps and communities, etc.
The most important focus is the end goal. Being debt-free brings true financial stability. No more draining payments each month. Your full paycheck is yours to save and spend freely. This lasting financial freedom and peace of mind make it all worthwhile.
