Financial health is an important part of your daily life. Being financially stable will reduce the stress that you have around finances. While you may not be able to afford a luxury vacation or purchase the most expensive handbag, being in control of your finances does equate to more financial freedom. You will have more options when it comes to credit cards, loans, and investment opportunities. Paying off debt can initially seem overwhelming, especially if you hit a financial hurdle that seems insurmountable. It may take a lot of time and discipline, but improving your financial health is possible. Following these tips can help you pay off your debt faster.
Reduce Your Expenses
When you are hit with a huge debt, the first thing that you’ll want to do is reduce your unnecessary expenses. The average American spends $1,497 per month on non-essential items. You may want to consider eliminating unnecessary extras like fast food meals, and services that you can do on your own for example washing the car or mowing the lawn.
Cancel the monthly entertainment subscriptions like Netflix and premium cable. Many people find that they can use their cell phones and basic internet services for their entertainment and those fall into the utility category. While many people use cell phones and basic internet services for entertainment, they fall into the category of entertainment.
Utility bills are a necessary monthly expense, but you do have some control over how much you pay. Reduce the amount of water and electricity that you use. Don’t run the dishwasher unless it is full. Every time you leave a room, make sure you turn out the lights.
Create a Budget
Start tracking your expenses to determine which ones are essential and which ones can be eliminated with a service like Plaid. This can help you get a handle on your income and expenses and determine if you have extra money to pay off your debt.
As you focus on paying off your debt, you may want to set aside some money to build up an emergency fund. Even a small fund can prevent you from getting deeper into debt when the next unexpected expense arises.
Get a Side Hustle
Increasing your income with a side hustle can help to pay off your debt faster. A side gig not only gives you more work experience but also increases your cash flow. You will have more available funds to put towards paying off your debt.
There are lots of side hustles that can fit into your daily life. Many pet lovers sign up for rover.com and start walking dogs in their spare time. People who are on the road a lot may want to sign up for uber to earn extra cash while they are commuting to and from their jobs.
Thinkflow’s Income Helper has a wide variety of jobs that are great for side hustles. There are jobs for people who need to work from home and apps that can help you pick up extra money when you shop.
Consider Debt Consolidation
When you have multiple debts, it can be difficult to pay them all off. Debt consolidation services allow you to roll the debts into one payment with a lower interest rate which can make your debt easier to manage and less expensive. These companies often will negotiate better interest rates for you.
A debt consolidation loan is an option for people who have racked up high amounts of credit card debt. You will likely need a good credit score to qualify for the debt consolidation loan, but many lenders take into consideration a less than perfect credit score.
Stop Using Your Credit Cards
The average credit card interest rate according to the Federal Reserve is 14.54%. Continuing to use credit cards will increase your debt if you can’t pay off the balance each month. While you are focusing on paying off your debt in 2022, it is a good idea to suspend the usage of your credit cards.
Don’t cancel all of your credit cards because you still want to have access to credit if you need it. It also could negatively impact your credit score by eliminating your credit cards entirely. Make a plan to pay off more than the minimum balance of your credit card debt each month. Not only will you start to work your way out of debt, but it will also improve your credit score if you have credit cards and use them responsibly.