Do you struggle to remember the last time you used only cash to pay for things? It seems as though we rely on our cards now more than ever. So it’s no wonder debt is so easy to rack up.
You might be here because you’ve noticed your debt starting to climb. Or maybe you’re struggling to make progress with your student loans. You may feel overwhelmed by the prospects of paying everything back.
But we’ve got a few tips here on how to be debt free. Take a read through them and commit to taking measures toward having no more debt.
Do you know how much you owe and to whom? Is all your debt on credit cards or do you owe money in loans as well? Is there anyone in your life to whom you owe money?
Before you can start paying off your debt, you need to know where you owe money. You also need to know what’s caused your debt to accumulate.
It’s one thing if you’re still paying off your student loans. But if you’re buried in credit card debt, you may need to take stock of your spending habits.
Go back through your transaction history and review your spending. Where did you spend the most in the last month? Are all those $5 coffees adding up without you noticing?
How about those Amazon purchases? Do you have a lot of online subscriptions that are padding your credit balance?
Take stock of where your money is going. Write things down and revisit your budget. You need to know where your money is going before you can direct it elsewhere.
Pause or Cancel Your Card Access
One of the more creative ways to pay off debt is to pause your credit cards. If you realize you’re spending way too much on your cards each month, pause or cancel them. Sometimes you can pause your credit cards for up to a month. Give that a try if you know you need to stop spending immediately.
If you have subscriptions on your cards, see if you can transfer those to your debit card. Maybe reevaluate whether or not you truly need those subscriptions. Netflix is not a necessity. Neither is Amazon prime.
If you can go without these subscriptions for even a few months, you can avoid racking up more debt. While you’re paying off debt, you’ll want to resist charging any other payments to your credit card.
How to Be Debt Free: Use Cash
This is one of the most well-known and straightforward tips on our list. It’s very hard to increase your debts when you’re only using cash. But before you switch over to cash, you’ll want to make a budget.
Budgeting to get out of debt involves a few strategies. For one, you’ll need to budget monthly repayments. This should be, at the very least, the minimum balance on your card. It could be much more than that, however.
Second, you need to make sure you’re putting whatever you can into savings. And you need to make sure your monthly expenses aren’t adding up to more than your monthly income. We live in a world of online shopping and one-tap payments. It can be surprising how much you spend if you’re not following a budget.
Pay Off Credit Cards First
Often, credit cards have some of the highest interest rates of any loans. For this reason, you may want to pay off your credit cards first. If you have debt on multiple cards, start by paying off the credit card with the highest interest rate.
It can be tempting to pay off a little bit on each card at the same time. But try not to do this. Your small payments may not make enough progress. If so, you’ll only extend the amount of time you have to pay those interest rates.
It’s also a really good feeling to finally pay off a credit card balance. Doing so could boost your confidence and motivate you to pay off the others, too.
Keep on Saving
When you’re in the grip of debt, it can be so tempting to put all your extra cash toward repayments. However, some of the best advice on how to become debt free is to keep saving even while you pay off your debt.
This may not be much, especially at the start. You may only be able to save $10 a week. That’s two cups of coffee or a second-hand book. Put that money into an emergency savings account instead.
Paying off your debt is an important goal, but saving is even more important. Think of it this way: if you don’t save and end up in an emergency, you’re going to have to use credit to pay your way out of it. If you have some money saved up, you can pull from that account without accumulating more debt.
Sometimes, you can try all of these tactics but still feel really overwhelmed. In that case, you may need to ask for help.
Make an appointment with your bank to discuss your options. You may need to refinance your loans, your mortgage, or your car payments. Alternatively, loan forgiveness may be a viable and necessary path for you.
If you’re looking for smaller ways to get help, consider asking friends or family to help you host a garage sale. You can sell a bunch of stuff you’ve packed away or stopped using. Then you can put that money towards your savings account.
You Can Do This
Learning how to be debt free shouldn’t be rocket science. It shouldn’t feel unattainable. No matter how insurmountable your debt feels, you can pay it off.
It may not happen overnight. And if your debt is hefty, it probably won’t happen overnight. But with small, consistent changes to your habits, you will eventually be debt free.
So don’t put off your debt repayment any longer. Start by creating a budget. Pause your credit card. See where you can cancel a subscription. Today, take your first step towards being debt free.