If you feel like you’re buried alive in bills for credit cards, student loans, personal loans, or auto loans, you’re not alone. Getting into debt happens to a whole lot of people, but once you’re in debt, it’s not a place you want to stay.
Paying off debt requires commitment and it also requires paying attention to your spending habits. Finding the cash to pay off debt can be done by decreasing your spending, increasing your income, or a combination of both.
Cutting Costs
Where’s your money going each month? Make sure you have a handle on how much is coming in every month and how much is going out. Where can you cut costs so that there’s more money available to pay down debt? Some things that you might do to reduce expenses include:
- Cut cable or streaming services.
- Reduce eating out.
- Cancel unused subscription services.
- Use public transportation.
- Buy used clothing instead of new.
- Reduce housing costs by getting a roommate.
Stop using your credit cards so that you can avoid making your debt any larger. You may also want to consider consolidating credit card debt into a personal loan.
Bringing in Extra Money
When you’re looking for a way to pay off debt, it helps to increase the amount of money you’re bringing in. Examples of side hustles that can bring in extra cash to put toward your debt include:
- Selling unwanted items such as gently used clothes, books, and CDs on eBay or by having a garage sale
- Providing services that don’t take much time such as creating logos on Fiverr
- Tutoring
- Babysitting
- Dog walking or pet sitting
- Uber or Lyft driver
- Grocery delivery or other delivery services such as Postmates, Uber Eats, and Instacart
- Handyman services through TaskRabbit
- Earn extra cash with Steady. Steady is a free app where you can quickly find local listings for jobs, earn extra cash in your free time, and easily track your income. Steady has helped over 2.7 million workers find jobs, and make an extra $5,500 a year, on average.
Paying Down Your Debt
Once you’ve found a way to have some additional money to put toward your debt, make a plan to reduce what you owe. One approach is to list all your debt from the highest balance to the lowest. Pay the minimum amount due on all but the smallest amount owed and put any extra toward the smallest balance. Once that bill is gone, take what you usually pay toward it and credit it toward the next lowest balance.
The above approach is known as the snowball method and it can be rewarding to gradually see some of your smaller balances paid off quickly. Another approach is to list debt by interest rate and put any extra money toward the bill with the highest interest rate. This approach can save money on interest. Either approach allows you to focus primarily on paying off just one bill at a time.
Protecting Your Credit
Your credit score is based on a combination of factors, one of which is the amount that you owe. Paying down your debt is one factor that will help to improve your credit score.
Dovly can help you identify any negative factors that may be driving down your credit. We are experts in credit and are here to guide you on your path to financial freedom. Try it risk-free with our free membership tier.
