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4 Simple Ways to Start Paying Off Debt

start paying off debtNobody likes to be in debt. It is hard to think about anything else when you know that your bills are piling up and you have no way to start paying off debt in a timely manner.

Not only will you spend a fortune in interest charges while trying to get out of debt, but you will also rack up late fees and do damage to your credit score as well. If you want to keep your financial future on track, one of the first things you need to do is get out of debt promptly.

Despite what you might currently believe, you don’t actually have to do anything ‘crazy’ in order to start paying off debt. In fact, the best way to resolve this situation is to take a collection of little steps that all add up to a big move in the right direction. Here are four simple steps that you can take to start paying off debt sooner rather than later.

Never Pay Only the Minimum

Hopefully you are already following this tip, but it not, now is the time to start. When it comes to things like credit card debt, you want to avoid paying just the minimum balance due when you make your monthly payment.

If you only pay the minimum, you will barely be making any progress at all on your debt – so the problem will be with you to stay. Instead, try to at least pay a few dollars over the minimum, if not more. Of course, you need to balance how much you are paying with the rest of your budget for the month, but do your best to increase your payments gradually to take bigger chunks out of the total debt load.

Skip One Dinner Out

This might seem like a basic point, but it is incredible how effective it can be to help you start paying off debt. If you are willing to skip one dinner out per month and put that money toward your debt load instead, you could add $50 or $75 to your debt payments every month.

That doesn’t sound like much to you? Well, it is somewhere between $600 – $1,000 per year, which is certainly significant in the big scheme of your financial life.

Move Debt Up Your Priority List

Maintaining a family budget is all about priorities. Rather than prioritizing things like movies, meals out, vacations, and more, start making your debt payments a top priority. Of course, that doesn’t sound like much fun in the short run, but it will pay big dividends over the long term. Making short term sacrifices for long term gains is what paying off debt is all about.

Consolidate Debts

If possible, look into consolidating your debts into a single payment with a lower interest rate. By piling all of your various debts together into one monthly payment, you can simplify the process and possibly save yourself large amounts of interest along the way. It is the interest on these accounts that makes them so difficult to pay off, so work to bring them all together and your pay off date may come into focus much sooner. There are many options to consolidate your debt, such as Lightstream, that can significantly cut down the amount of interest you have to pay and become debt free quicker.

 

Can you think of other ways to start paying off debt? Did you use any of these tips to help you get started?

 

Photo courtesy of: NikolayF

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John Schmoll is a Dad, husband and veteran of the financial services industry. He's passionate about helping people learn from his mistakes so that they can live lives free from the shackles of debt and empowered to make their money work for them. You can check out his other sites: Frugal Rules, for ways to improve your financial literacy; and Sprout Wealth for tips on different ways to make more money. John has been featured on Forbes, Lifehacker, Yahoo Finance and US News & World Report and more. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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2 comments

  1. “Never Pay Only the Minimum” is a key tip! Also, to help make progress on paying off debt, many people find that taking on some side-gigs to earn extra money can be a HUGE help. Driving for Uber, or a part-time job, or even things like taking surveys. Every little bit of additional income can accelerate the debt paydown process.

  2. Of course. To increase the amount of what I pay, I look for side hustles and never settle to what is stipulated in contract, probably. I was surprised when I finished paying off my debt 6 months earlier than what is expected.

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