For many consumers, getting rid of debt can be difficult. Debt comes in many forms,
from school loans to credit cards. In wake of the Covid-19 pandemic, managing your
finances is more important than ever. Some people have had to take pay cuts and
others lost their jobs completely. If you’re looking to get on top of your finances, begin
by getting rid of your debt. Here are eight ways you can claw your way out of debt right
Track your spending
The first step to eliminating debt is fully understanding where your money is going.
Using your monthly bank statements to list out all of your bills. Take a record of
essential bills, including your rent/mortgage, water, and groceries. After that, identify
your credit card bills and loans that you have to pay back. If you have trouble tracking
those bills down, you can also sign up to track your credit for free.
Typically debt can pile up when you are spending too much and don’t have enough
money for bills, or when you don’t have enough income coming in. Sometimes it’s
possible you might didn’t have the money to pay a bill one time and never went to it.
You could also be behind due to being temporarily out of work because of the recent
pandemic. Life can have unexpected moments. If you’re behind on payments,It could be
helpful to speak to a representative about the bills you are paying to get the full scope of
what your payments will look like moving forward.
Create a Budget for Yourself
Once you’ve tracked your spending, you can create a budget! A budget can help you
establish any long-term goals, spending cuts, and money-saving tactics all while
keeping track of the progress you’re making towards your financial goals. finances. For
example, you might be in the market to purchase a new vehicle or on the hunt for your
dream home, and budgeting can help you achieve those goals.
When establishing a budget, it’s also important to create an emergency fund. If there’s
anything that the recent pandemic has taught us, it’s that life can have unexpected and
unpleasant surprises. You can get sick, injured, or laid off, so it’s important to be as
prepared as possible. You don’t have to build up your emergency fund right away, you
can start by calculating how much money to set aside a week. Your emergency fund
should consist of three to six months worth of living expenses. Once your budget is
complete, the money that you just cut could be used to pay off any debts you may have.
Set up Auto-Pay
A great way to get rid of debt is by setting up an automatic bill payment service. An
automatic bill payment is when you agree to let a company or service take money out of
your bank account at preset times. By setting up auto-pay you are taking pressure off
yourself by not having to worry about making manual payments. It can be very difficult
to keep track if you get overwhelmed by every bill.
Setting up auto-pay can help you hold yourself accountable and prevent you from
receiving any late fees. Most autopay programs let you choose your due dates meaning
you can make your bills due on or near payday. If you need a later payment, you can
call the company or service you autopay with and work it out with them. If you are
looking to work your credit score, setting up auto-pay is one of the many components to
improving your credit score.
Pay as much as you can, when you can
If you want to get out of debt fast, one tactic is to put as much as you can toward debt
every month. The higher the payments you make can bring you closer to becoming
debt-free. Since you’ve created a budget and changed the way you spend your money,
there’s a chance that you have extra money to spare. Use that money to pay more than
the minimum payment. Before you know it, you’ll be able to get rid of one of your own
bills. You can also try targeting your lowest balance first to pay it off while making
minimum payments on your other debts. This is known as the snowball effect method!
Utilize Debt Consolidation
In some situations, you could be struggling to make ends meet and are bringing in little
to no income. If this is you and getting out of debt fast is a must, you might want to
consider debt consolidation. Debt consolidation is where you reduce the interest rate on
your debt and lower monthly payments. There are multiple ways you can consolidate
your debt, but before doing so, you can always refer to a free debt consolidation
calculator. This option helps consumers keep up with multiple bills and deadlines.
Simply put, with debt consolidation you’ll make a one-time payment each month that will
cover all of your bills.
Consider Credit Card Balance Transfers
Credit card debt is a common factor of debt for consumers. According to this article from
CNBC, Americans started 2021 with nearly $900 billion in credit card debt. If you’re a
consumer facing this problem, you might want to consider a credit balance transfer.
Balance transfers allow you to save money on your interest while paying off your credit
card. Through a transfer, you can streamline and make payments easier while
managing your finances. Instead of making multiple payments to different credit card
accounts, you can combine and consolidate your debts onto one card and only worry
about one single payment. There are plenty of credit cards to choose from, some of who
even offer a 0% annual percentage rate! Before deciding on whether or not to consider
credit card balance transfers, make sure you understand what you are signing up for.
Refinance Your Home
If you are a homeowner looking to get rid of debt, refinancing your home loan could be
an option for you. A refinance allows you to change the terms of your mortgage loan to
make paying your bills easier. You can also get cash out of your equity to pay your debt.
Typically, a homeowner would refinance to lower the cost of their interest rate, increase
or decrease their loan terms, or take cash out of low-interest funds to pay off debt or for
personal things like home improvements or starting a small business. If you are looking
to fill out an application to refinance, there are a few things that you should consider
before doing so. Home loans are one of the easiest ways to borrow money, so learning
more about the cost of refinancing can be beneficial before filling out an application.
Start a Side Hustle
Another way to clear debt is by generating more money. Getting a side hustle can give
you a diverse stream of income. There are tons of part-time jobs that can provide you
with additional money you can use to pay any debt balances you owe. While part-time
might not pay as much, every dollar counts. Since the pandemic, there’s been a surge
of remote jobs that you can do straight from your computer. Think about what your best
skills are and how you can leverage them. The more money you make, the more debt
you can clear.
Clearing debt can be a slow process. But when you are paying that bill, think about how
much money you will save yourself in the long run. Using these tips above will put you
on the right path to clearing your debt and living financially stress-free. It all starts with
changing the way you spend your mindset and focus on where you can start making
changes right away.
If you want to create your exit strategy from corporate by turning your idea into income, then let’s chat. Head to myideatoincome.com to apply to book a complimentary call to see how you can launch your idea and turn it into your corporate exit strategy.
Aisha Taylor is a single mom of twins, personal financial coach, work from home entrepreneur, and #1 Amazon Best Selling Author of the books “First Class Life Devotional: 35 Stories of Phenomenal Faith During Turbulent Times” and “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle.” Aisha has been featured in ESSENCE, Jet Magazine, and Black Enterprise. She is also the Founder of FNPhenomenal, a movement designed to help corporate moms create their exit strategy from corporate by turning their ideas into income!