As January is the official month to make New Year’s resolutions, why not add “pay off debt” to the list of worthy goals to tackle this year? Here are three simple ways to wipe the debt slate clean, once and for all.
Review Monthly Income and Expenses
Dedicate time to carefully review how much money you make each month, as well as your essential expenses, such as utility bills, groceries, and rent or mortgage. Then subtract these non-negotiable fees from your income to determine the minimum amount you need to live. Next, add up discretionary expenses like coffee shops, restaurants, and your cable bill to see where you spend the rest of your hard-earned cash. Lastly, subtract these costs from what’s left after paying for essential expenses to see where you may be living beyond your means, and potentially adding to debt.
Tackle What You Owe
Finance expert Dave Ramsey is a big fan of this method to erase any debt you have, regardless of interest rate on a credit card or loan.
- Compile a list of debts in order from smallest to largest.
- Pay down the smallest one with as much as possible, while only paying the monthly minimum on the others.
- As you pay off each one, hit “repeat” and move on to the next smallest one, until you’ve wiped the debt slate clean!
Find Other Ways to Trim Expenses
Examining where you can cut back on costs will both enable you to pay down debt, as well as help you begin to save for emergency expenses.
- Cut back on takeout food, restaurants, and even lattes! You can make killer coffee at home.
- Cut the cord! Just how many streaming TV services do you actually need? Today, there are many ways to reduce that hefty cable bill, such as YouTube TV and Hulu.
- Carefully compile your food-shopping list, and don’t deviate from it once you hit the store. Nutritionists advise shopping on a full stomach so you’re not tempted to fill your cart with sugary snacks or miscellaneous items you really don’t need.
Still have questions about debt? Check out the Federal Trade Commission’s website for more in-depth tips on how to get out of debt, and what you may need to know about debt relief services, debt consolidation loans, and even bankruptcy.
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