- Stop using credit cards
The more you swipe that credit card, the more the balance climbs. If you’d really like to get out of debt, stop borrowing from Peter to pay Paul. If you’re having a difficult time letting go, try freezing your cards in a cup of ice and hopefully by the time you can access them again, you will have changed your mind.
- Pay the most that you can afford monthly
Rather than paying the minimum monthly instalment on your debt, look for ways to pay as much as possible. The more you pay, the faster you’ll get out of debt. Allocate any spare income towards debt repayment for this purpose.
- Spend less wherever you can
Learn to tell the difference between wants and needs. Using a budget can help a great deal in this regard. Skip daily trips to your local coffee shop, walk rather than taking an uber or a taxi, skip buying lunch at work and rather take lunch box. Over time, these small savings add up and can be used to dig you out of the debt hole much faster than you would expect.
- Double up on payments where possible
Once you’ve paid off one credit card doesn’t mean it’s party time. Congratulations on accomplishing that goal, but keep in mind that it’s important not to lose your momentum. This is not the time to spend more on lifestyle and luxuries. Rather allocate those funds that are now freed up to diminishing the next balance in line.
- Use windfalls to reduce balances owing
This should go without saying, but if you get a sudden windfall — such as a tax refund or a bonus at work, don’t spend it on a splurge. Instead, bite the bullet and use a portion of the funds to pay off more of your debt.
- Tackle debts with the highest interest rates first
Save money on interest by eliminating your debts with the highest interest rates first.
Although some prefer the debt snowball method, (which suggests that you pay the debts with the lowest balances first to build momentum), it makes more financial sense to clear those debts with the higher interest rates first. The ultimate goal is to pay off debt, however, so the choice is yours.
- Find ways to supplement your income
If you have the time and any particular marketable skills, try a side-gig to make some additional income. You may be able to bake cakes or cookies after hours, do photography at weekends or design work online. Perhaps you have a knack for book-keeping and can assist family and friends with small businesses? In some instances, you may be able to generate quite a significant amount of extra cash, all of which should be contributed to your debt-payoff fund.
StokFella is a licensed FSP 48812 and Credit Provider NCRCP12735 T & Cs Apply.