Financial Blog

Personal Finance

You are not alone. Debt can be a difficult, emotional situation that 80% of Americans face. It can feel like servitude watching large chunks (or all) of your income disappear from your bank account each month. 

 

How to Pay Off Debt

 

Maybe you are hoping to win the lottery. Or marry somebody rich. Or waiting for a wealthy relative to die.

 

Well, while you are waiting, there are some action steps that you can take right now that will get you on the path toward financial freedom.

 

Here are 9 methods to pay off debt and eliminate it from your life for good.

1.Educate yourself. You got into debt due to a lack of financial education. Personal finance is not a life skill taught in school so most Americans suffer. Here are 3 financial educators to help get you on the right path: (1) Dave Ramsey, (2) David Bach & (3) Patrice C. Washington.

 

2.Visualize. This can sound a bit woo woo, but seriously- get a pen and paper and write out exactly how amazing your life will be once you are debt-free. What will you do? Where will you go? Who will you do it with? How will you feel? Be very detailed. When you are done writing, post this up on your wall or snap a photo with your phone and read it EVERY DAY until you get out of debt. (Note: This method only works when used along with the other methods listed here.)

 

3.Check your credit report. Once a year, you have access to a free credit report from the 3 major credit reporting companies: TransUnion, Equifax & Experian. There are mistakes listed on credit reports all the time. There could be even be charges listed on your report for which you are not responsible. If you find mistakes on your report, here’s what to do

 

4.Call your creditors. Everything is negotiable. Here’s a great book that can teach you how to negotiate. See if the companies can (1) reduce your bill amount in exchange for a lump sum payment, (2) lower your interest rate or (3) work out a payment plan. Caution: Deal with these creditors wisely. Get your agreement with the creditors in writing before you pay them anything. Do not give the creditor access to your bank account. Here is an article on how to negotiate credit card debt.  

 

5.Pay off your credit card debt. Credit cards tend to have the highest interest rates (around 23%) plus fees compared to your other debt. This means that you are giving the credit card company their money first before you even start to pay down the money you owe on your actual purchases. This could take YEARS. To pay this off, (1) write down the balance owed on each card, (2) pay the minimum balance on every card on time every month, (3) pay off the card with the smallest balance first, (4) work your way up each month until you can pay off the card with the largest balance and (5) put the paid off card away (or cut it up) and don’t use it anymore. (Note: Avoid cancelling the credit card account because this will negatively impact your credit score.)

 

6.Work, Work, Work. If you don’t have a job, go get one. Do anything (legal, of course). Whatever it takes to get income flowing in. Not your dream job? No problem! After you get ANY job, work hard at it while hunting for a better one. Rinse and repeat until you get to where you want to be. Here’s a resource for career-building.

 

7.Get a side-hustle. If you have a job, then use your evenings and weekends to earn some extra income. You could work online, cut grass, shovel snow, cook, clean, drive for Uber, babysit, housesit, dogsit and the list goes on. While our recent article on the summer paycheck gap was geared for teachers - the job advice applies to anyone.

 

8.Sell your stuff. Do you or anyone you know have things that you don’t really need? That set of golf clubs that you only used once. The old iPhone that still works fine. Your deceased grandma’s set of China. Put it on eBay. Have a garage sale. Post it on Craigslist. Every dollar counts towards your financial freedom. Heck, sell your house and car and get a cheaper one if you have to. Whatever it takes. It’s only temporary.

 

9.Buy/Sell/Invest in real estate. At first, this may seem a bit far-fetched, but finding a good real estate deal could pay off most or all of your debt. It’s not as difficult as you might think. Here’s a great resource that teaches beginners how to invest in real estate even if you don’t have any money. (Note: Do not attempt this until after you educate yourself first.)

 

Paying off debt can seem like an impossible task. Realistically, it can take 2 to 3 years to get out of debt even if you stay totally focused and start NOW. But if you think 2 to 3 years is a long time, try NEVER - which is when you will become debt-free if you do nothing. If you would like to jumpstart your efforts, consider a personal loan from LoanMe. You can speak to one of our agents about the benefits such as lowering your fees by consolidating and the possibility of receiving the loan as fast as 3-4 hours.