7 Ways to Get Out of Debt Fast
When your debt only seems to increase, living life can become stressful and frustrating, you can’t sleep at night, your relationships are affected and even everyday shopping like buying groceries can seem overwhelming. The impact of the stress can lead to physical health problems, including decreasing our capacity to fight off illnesses – which is the opposite of what we all need right now. To keep yourself from drowning, you could take out more loans or use multiple credit cards, but the harder you try to get out of debt, the deeper you sink, and sometimes if you are only paying off the interest, it can feel like you are trapped.
If you’re struggling with unmanageable debts and it’s causing you and your family financial stress, it’s important you act quickly. Whether you’ve run into money troubles with unemployment (thanks COVID), illness, a business or taking on too much debt – the first step in taking control of the situation is to ask for help. With some fundamental changes to your lifestyle, you can get out of debt fast – even with a low income.
However, turning around your financial situation doesn’t happen without some work. It requires commitment, planning, and strong self-discipline. But luckily, it gets easier over time as you build better spending habits. Don’t wait to take back control of your life. There are many ways to get out of debt fast.
Check out these tips for paying off debt fast
1. Stop Borrowing Money
The first and most important step in getting out of debt is to stop borrowing money. No more swiping credit cards, no more buy now pay later accounts, no more loans, no more new debt.
Reshaping your attitude toward money and debt is the most fundamental change that has to happen. In order to avoid digging yourself into a bigger hole of debt, you have to understand the true cost of taking on debt. Be prepared to live on a cash basis while you make your changes. Don’t worry about debt consolidation or balance transfers at this point – you’re still in the early stages. You don’t want to trade one kind of debt for another until you understand your situation and have a plan.
2. Track Your Spending
The next step in getting on top of your debt quickly is to understand where your money is going. It can be difficult deciding where you can stop spending without having a full picture of just how you spend your money. It’s best to track all of your monthly bills for at least a month as well as daily spending. Don’t forget to include your debt payment obligations while tracking.
Check out the latest unit in the FBC Financial Improvement and Growth (FIG) training centre for more information and a free spreadsheet to help you record and better understand your current debt situation. Insert link to FIG.
3. Create a Spending Plan (AKA budget)
Once you’ve tracked your spending, it’s time to create a spending plan. By using your regular spending as a guide, this plan should account for all of your needs. The tracking will also show you where you can cut spending. You’ll be able to see where you’re spending too much and where you can easily make budget cuts without deeply affecting your life. If we’ve learnt anything in recent times, it’s that life changes can happen in an instant and you may not be financially prepared to survive an emergency or significant change, such as the impact of a global pandemic. That is why it’s important to have a spending plan that is flexible and crafted specifically for you to support you in any situation. Flexibility is vital to success and will keep you on track if things go south. If you’ve done all of the planning and put your spending plan in writing, it will be easier to make the necessary adjustments. If your life changes, change your plans along with it. There may also be times that you must adjust to a temporary budget. Sudden events that take a sizable chunk of your income may require you to have a particularly strict budget for a few months. Even one month of living really lean may help you catch up financially. Be prepared though as the process of getting out of debt fast means making sacrifices. If you’re not committed to going without things you want, you’ll never succeed in getting rid of your debt.
You should also include financial goals. Writing down goals makes you more likely to achieve them. Your number one priority is probably to pay off debt but starting or building an emergency fund is a necessity, no matter your situation.
4. Create a Plan to Pay Off Debt
Now that your spending has been tracked and your budget is created, it’s time to implement a strategy to pay off your debt. If you’re trying to figure out how to get out of debt fast, you should try to put as much as you can toward debts every month. When you create your initial spending plan, set a minimum amount that you are putting toward debts each month. Any opportunity to add more will help get you to your goals faster. No matter what your situation, it’s important to pay more than the minimum required. Make this an ironclad habit. Even if you have a terrible month with unexpected emergency expenses, pay more than the minimum payment, if possible.
5. Consider Debt Solution Options
You may be one of the many people struggling to make ends meet with little to no income. If this is the case for you, how can you get out of debt fast with no money? If you’re overwhelmed with too many payments and not enough income you could try to renegotiate your debt contracts with your creditors to pay a lump sum amount instead of costly monthly payments, alternatively you might be considering a range of debt solutions such as consolidating debt or refinancing. However, you have to be careful about such strategies. Without the strict combination of budgeting, lifestyle changes and making payments, you may find yourself with even more debt than you had before.
6. Involve your Partner
Relationships are challenging at the best of times. Money troubles are one of the key factors in relationship breakdowns. However, trying to deal with the situation on your own by keeping it secret will only make the situation that much worse. When times are tough, it is more important than ever to work together as a team and support one another, and if you’re going to be successful it’s important to have a strict budget to pay off debt that the whole family knows about. As soon as possible, tell your partner about your debts and work together to develop a budget and goals that align to both your values and that you can work on together.
7. Don’t Give Up: Get Professional Debt Help
At Fix Bad Credit, we know that that mountain of debt can look overwhelming, we also know that that it’s possible to get out of debt, no matter how tough it might look. As debt solution experts, Fix Bad Credit assesses your unique situation and offers personalised, tailored debt solution options to help you take back control of your money and start on your journey towards financial freedom for you and your family. If you’re ready to take back control of your finances, get in touch with one of our expert, knowledgeable consultants for a FREE, NO OBLIGATION chat.
It’s important to remember that it’s not about how much money you make. High-income people can stay mired in debt their whole lives, and people with low incomes can live debt-free. Your spending habits can be adjusted to match your lifestyle. The sooner you develop those good spending habits, the better. Remember, you don’t have to go it alone.
The information in this article is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.