Many adults find themselves swimming in credit card debt, car debt, house debt and other types of debt. This can be very stressful and you might feel like you’re walking through every day with a gorilla on your back. Whether you’re dealing with unsecured or secured debt, eliminating it from your life will make a huge difference in your financial stress. Here are some easy ways to help you pay off debt.
Three Debt Elimination Strategies
1. The Budget
Probably the most important tool and strategy anybody can use to pay off debt is the budget. For you, the word “budget” might bring up thoughts of being poor or broke. A budget is just a tool and doesn’t say anything about how much money you have or don’t have. However, if you’re in debt, you are broke. This is just a fact. Whether you can afford the payments on your car, house and credit cards or not, you’re broke.
The best type of budget to use assigns each dollar a place to go. For example, if you make $5,000 every month (take home pay) and your bills come out to $3,500, you have $1,500 left over. This money still needs a place to go, whether it’s to pay extra on a debt, savings for retirement, entertainment or something else. Give every dollar an assignment and you might just find money within your budget you can use to help pay down your debts.
2. Cut Back on Savings, Temporarily
This strategy is a hard one for many to swallow, but it will answer the question, should I save money or pay off debt? If you already have thousands of dollars in the bank, why not use some of that money to pay down some of your debts? Of course, you don’t want to use it all because you need a little cash set aside for emergencies. Some experts believe an emergency fund of about $1,000 is enough, while paying off debt.
Just imagine how much better you will feel and how much freedom you’ll find within your budget when the car is paid off, the credit cards have a zero balance and even when you’ve paid off your mortgage. Imagine what you could do with your paycheck every month if it wasn’t already spent before you receive it. You could really start saving towards retirement, make sure your children can go to college and take that vacation of your dreams, finally.
3. Sell Some Stuff
The fastest and easiest way to eliminate debt is by selling some stuff. It’s just stuff and once you get out of debt, you can start saving money to buy some more stuff. If you have a TV, vehicle or anything else (other than your house) and you owe money on it, sell it and use the cash to pay it off. Anything you don’t need to survive, can be sold to help pay down debts until you get yourself out of this hole.
Paying off debt frees up the money you need for other things and the faster you can eliminate all your debt (except the mortgage), the sooner you can experience the peace of mind that comes with financial security. Use a budget, cut back on savings (temporarily) and sell anything you really don’t needs to free up the necessary cash to pay off your debts.