Become Debt Free: 5 Key Ways to Get Out of Debt Fast - Karen Salmansohn

Become Debt Free: 5 Key Ways to Get Out of Debt Fast

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Spending less money is just one way to become debt free. Keep reading for 5 tips to get out of debt fast.

Americans owe a total of $14 trillion in consumer debt. This number accounts for mortgages, auto loans, student loans, and credit card debt. If you’re like most Americans, you’re facing your debt in one or more of these categories.

It may seem like a pipe dream to become debt free. But you can achieve this financial goal by implementing a few simple tips into your financial plan.

Become Debt Free: 5 Key Ways to Get Out of Debt Fast

Try these five tips and experience what it’s like to become debt free.

1. The Snowball Method

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Create a list of all of your debts from smallest to largest. Then focus on paying off the smallest one first. Make minimum payments on the rest of your debts.

This will ensure you don’t default on any of your debts while you focus on paying off the easiest debt first. As this article from Captain Cash discusses, you want to maintain a positive credit score, so it’s easier to obtain a loan once you pay off your debt. Once you pay off the smallest debt, move on to paying off the next smallest debt.

You will be happily on your way to become debt free, if you simply continue this practice until you’ve worked your way through your list of debts.

2. Ditch the Expenses

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Take a look at your monthly spending and figure out where you spend the most. Then consider whether or not you truly need to spend that money. There are a few ways you can cut spending out of your budget.

  • Pause participating in an expensive hobby
  • Cut your gym membership
  • Cancel cable
  • Stop the coffee shop visits
  • No more restaurants
  • Plan your grocery shopping

Good news. If you want to become debt free, you don’t have to give these things up totally. Simply look for ways to replace them with cheaper alternatives. For example, you could make coffee at home, run outside, and stream tv shows online.

3. Plan for Emergencies

One common way people get further into debt is the unexpected emergency expense. They’re then forced to use credit cards or take out a loan. Instead, plan for these expenses by saving $1,000.

Money experts will advise that you save three to six months in an emergency fund, but it’s best to start with $1,000 while you focus on paying off your debts. You can then start saving more later.

4. Sell Sell Sell

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Take a look around your home for unused items. This could be old furniture, clothes, toys, accessories.

Anything that you no longer need or use.

If you want to become debt free, start selling these items for extra cash and then putting that money towards your debt.

5. Negotiate

If you owe a lot of credit card debt that doesn’t seem to be going away, then try negotiating with the credit card company. Ask them for a lower interest rate. You’ll need to have a solid history of paying your bills on time.

You can also try this strategy with your other loans and debts. Remember, the worst someone can do is say no. You’ll never receive if you don’t ask.

Become Debt Free in 2020

By applying these five tips to your current financial situation, you too can become debt free in 2020. The true trick is to reduce your spending while focusing on your repayment efforts.

Reduce Anxiety While You Reduce Debt

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I will give you techniques to help you manage your anxiety so you can reduce your stress while managing your finances.

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