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13 expert-approved tips for getting out of debt

The average American household is $8,000 in debt. With the rising cost of living and stagnant wages, it’s not surprising that people find themselves struggling to pay off their debts. Here are 13 expert-approved tips for getting out of debt.

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Dealing with debt may seem to be hopeless at times.

You make every effort to pay your bills on time, but interest rates eat away all of your progress. You’re back to square one the next month.

Does this ring a bell? Don’t worry: you don’t have to be in debt for the rest of your life. We spoke with a number of professionals to obtain their best advice on how to get out of debt.

This is what they had to say about it.

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1. Determine Your Motive

13 expert-approved tips for getting out of debt

Before you get into the nitty-gritty of debt repayment, figure out why you want to be debt-free in the first place. According to Fo Alexander, creator of Mama & Money and author of “Dump Debt & Build Bank,” this is critical for staying motivated when things become tough.

Perhaps you wish to reduce stress or provide a better life for your children. Perhaps debt is preventing you from launching your own company or taking a dream trip. 

“Paying off debt, particularly if you have a lot of it, may be difficult and depressing,” Alexander added. “Whatever your reason is, be sure it’s sufficient to keep you going when things get difficult.”

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2. Assess Your Position

13 expert-approved tips for getting out of debt

Once you’ve determined why you want to pay off your debt, you’ll need to assess your present financial situation and create a basic budget.

Leslie H. Tayne, a debt solution attorney and managing director of Tayne Law Group, P.C., stated, “You need to know what goes in and out of your home and if those expenditures can be met with your income.”

Make a list of all of your monthly expenses, such as healthcare, utilities, insurance, daycare, and housing. Don’t forget to include in debt payments as well.

After that, sum up all of your monthly earnings and deduct your monthly expenditures. Your cash flow is the money left over, and you may be shocked to learn that it’s negative. If that’s the case, you’ll need to discover methods to reduce costs so you can pay off debt faster and ultimately increase your savings.

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3. Recognize your bad spending habits

13 expert-approved tips for getting out of debt

Once you’ve established a baseline budget, examine your discretionary spending (also known as “wants”) for areas where you might save money. Don’t worry: you don’t have to live on a shoestring budget for the rest of your life. 

However, if you want to get out of debt quickly, you should search for methods to save money and eliminate those expenditures. 

“If you don’t address the behaviors that got you into debt in the first place, it’s easy to slip back into it,” said Andrea Woroch, a consumer and money-saving expert.

Identifying and eliminating expenditure triggers, she said, may assist. “Everyone has a trigger, and it’s critical to recognize it in order to avoid it and keep your financial advantages.” 

Delete shopping applications and turn off push alerts for deals if you’re a compulsive shopper, for example. 

Stop shopping at Target or Costco in person if you can’t walk in without purchasing a lot of things you don’t need (guilty). “Instead, buy online and choose curbside or in-store pickup, or have the goods delivered straight to you,” Woroch advises.

And put that additional money toward debt repayment every time you avoid an impulsive buy.

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4. Boost Your Income

13 expert-approved tips for getting out of debt

There’s just so much scrounging and saving you can do. Earning more money, in addition to reducing your expenditure, is another method to pay off your debt faster. 

“It also doesn’t have to be a full-time or part-time employment,” Tayne said. “Side jobs like baking, photography, dog walking, babysitting, ride-sharing, or renting out empty space in your house may all help you make additional money.”

Keep in mind that gig workers must pay taxes on their profits, so put aside part of your earnings for tax season and find out whether you need to make quarterly anticipated payments.

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5. Concentrate your efforts.

13 expert-approved tips for getting out of debt

When it comes to debt, it’s easy to get overwhelmed. Keeping up with expenses, paying off debt, saving for retirement, purchasing a home, and so on may all be conflicting concerns.

“People want to feel progress, so they divide their attention and resources over all of these goals,” Brian Walsh, a certified financial adviser with SoFi, said. “While this may seem to be reasonable, it is the polar opposite of what we suggest.”

Instead, concentrate on achieving one objective at a time. You’ll achieve more progress in a shorter amount of time, and progress leads to perseverance. For example, before moving on to your federal student loans, focus on paying off your high-interest credit card debt.

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6. Make a list of micro-goals.

13 expert-approved tips for getting out of debt

Getting out of debt is a huge objective that will most likely take a long time to achieve. If you just concentrate on that one major objective, you may feel as if you aren’t making any progress and get disheartened.

“We suggest breaking down your money into micro-goals so you can concentrate on 30-60 day sprints leading up to the main objective,” Walsh added. 

Create a micro-goal of paying off one credit card over the next month, rather than stating, “I want to erase all of my credit card debt.” Then you may reevaluate your position and decide on your next objective. 

“The important thing is that they be short-term, quantifiable, and attainable, and that they contribute to the larger objective.”

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7. Begin to Build a Debt Snowball

13 expert-approved tips for getting out of debt

When it comes to debt repayment, the conventional wisdom is to start with the loan with the highest interest rate and work your way down (also known as the “debt avalanche” approach). From a mathematical standpoint, this is the most efficient method to save money over time. However, if you find it difficult to remain motivated, this may not be the ideal approach for you.

Instead, if you need a mental boost, consider the debt snowball technique. This entails first paying off your lowest debt and then paying the minimums on the remainder. Apply your additional money to the next-largest loan after you’ve paid off the first one, producing a snowball effect.

“Writing off an entire account of debt is a huge win and offers some much-needed positive reinforcement,” Maria Alcantara, a certified investment manager and creator of Millennial Money Queens, said. “Managing money is often a mental exercise; we must remember that we are human beings, not machines capable of making the most rational and analytical choices.”

The debt snowball technique makes debt repayment enjoyable rather than painful. Although it may cost you a bit more in interest in the long run, the psychological advantages may be worth it.

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8. Don’t Just Pay the Minimum

13 expert-approved tips for getting out of debt

You can avoid late penalties if you make the minimum amount required on your bills. According to Tegan Phelps, creator of The Blissful Budget, it’s essential to pay more if you want to get out of debt entirely. Otherwise, you’ll find yourself trapped in a loop of barely paying off the interest you’ve accrued each month. 

“By doing so, you’ll be able to pay off your debt faster and save money on interest,” Phelps said.

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9. Set up recurring payments

13 expert-approved tips for getting out of debt

Another mental barrier to debt repayment is needing to withdraw funds from your bank account and transfer them to your creditors. Moving your hard-earned money from one account to another may be a psychologically taxing procedure.

As a result, setting up automatic payments may be beneficial. 

“Setting up automatic payments guarantees that you are paying at least the minimum amount each month,” said Phelps. “Instead of attempting to remember to pay your amount after receiving your statement, this enables you to remain consistent with your payments.”

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10. Make an application for a 0% balance transfer card.

13 expert-approved tips for getting out of debt

If you have a lot of high-interest credit card debt and a good credit score, transferring the amount to a 0% balance transfer card is an easy method to get a head start on paying it off.

Many card issuers will give you 0% interest for anything from 12 to 24 months if you transfer your balance from a rival in order to attract new clients. 

“This implies that your monthly payment will go entirely toward your previous purchases/expenses, with no interest paid, allowing you to pay off your debt quicker and with less money,” Woroch said.

It’s critical to cease charging expenditures to the old card from which you just moved your balance while utilizing this method. Also, take advantage of your 0% interest term by paying off the whole amount before interest begins to accrue; otherwise, you may find yourself back where you began.

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Negotiate Your Rate 11

13 expert-approved tips for getting out of debt

Did you know that if you’re in good standing with your lender, you may negotiate your interest rate? One method to get ahead of your debt, according to Carmen Perez, a personal financial expert at Varo Bank, is to contact your creditors and request a rate decrease.

Maintain a calm and courteous demeanor while phoning. Using instances of how you’ve been a good client, such as paying all of your payments on time, may assist. Your lender may be prepared to reduce your interest rate temporarily or permanently, enabling you to put more of your payment toward paying down the debt.

Perez said, “It never hurts to try.” “The worst thing they can say is ‘no,’” says the narrator.

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12. Bankruptcy should only be used as a last resort.

13 expert-approved tips for getting out of debt

The prospect of declaring bankruptcy may be frightening. It’s also something you should only do as a last option since it may negatively impact your credit for years. Even yet, if your position is severe, it may be worthwhile to pursue.

“If your debt burden is so enormous that you can’t make a dent in it even after rigorous budgeting,” said bankruptcy attorney Thomas C. Rollins, Jr., “then bankruptcy may offer a means for you to remove it and have a new start.” “While bankruptcy can harm your credit for 7-10 years, depending on the chapter of bankruptcy filed, for those who utilize it correctly, it can frequently result in a dramatically better financial position.”

If you’re drowning in debt due to a job loss, a medical emergency, or a divorce, consider the benefits and drawbacks of filing for bankruptcy. And if you do decide to file for bankruptcy, don’t put it off – you’ll likely do far better if you file sooner rather than later if you’ve been suffering for years.

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13. Remember to Reward Yourself

13 expert-approved tips for getting out of debt

You didn’t fall into debt overnight, and you’re not going to get out of it any faster. It may seem like the road to debt freedom is endless at times, which is why Grant believes it’s critical to set up positive reinforcements along the route.

“As you strive toward debt freedom, establish reasonable objectives for yourself and reward yourself when you achieve them,” he said. If you cook at home four days a week to save money for debt payback, for example, treat yourself to take-out for lunch on Friday. “By being able to see the light at the end of the tunnel, this positive reinforcement adds a degree of excitement to the trip.”

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This story was syndicated by MediaFeed.org and first published on YourMoneyGeek.com.

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