7 Best Practices to Get Yourself Out of Debt in 2018
Friday, December 22, 2017, 6:00 AM | Leave Comment
As the year draws to a close, your mind may play over the triumphs and tribulations of time past and begin making plans for the new year.
Personal finance is one topic that crosses both lines, but if you have debt hanging over your head, it is more a matter of making resolutions than nostalgia.
You want to get out of debt more than anything and experience the sense of freedom that financial security brings.
Vague New Year’s resolutions to pay off credit cards, car loans, and student debt are nice, but without an actionable plan, it will probably still be a dream on the last day of 2018 as well.
If you follow these 7 best practices to pay down debt, however, you will surely have a reason to raise that glass of champagne and toast to a happy life next year.
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List Expenses and Budget
If you do not know what you spend every month and where you can save, you will not know where the money will come from to pay down debt more quickly.
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Know Your Debts
The monthly bills tell you what to pay, but they do not tell the whole picture. Find the total debt amount and interest rates so you can determine which to pay off first.
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Renegotiate Rates
Contact the credit companies and debt holders to discuss lowering the interest rate or waiving fees or other non-principle charges. They might refuse, but it cannot hurt.
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Transfer Balances
If you qualify for 0% interest loans or credit cards, transfer high-interest debts to these for pay-off purposes only. Resist the urge to spend more. Interest adds hundreds or thousands of dollars to the money you actually owe over the life of any loan.
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The Snowball Method
Ever see a cartoon of a snowball rolling down the hill, getting bigger and bigger until it breaks and disappears at the end? This is what your debt payback can do if you attack it correctly.
Pay minimum balances on all debts, and put all the extra money toward the loan or credit line with the largest interest rate first. Then, when that is paid off, snowball that whole payment to the next-highest-rate debt.
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Find More Money
There are two ways to pay off your debt faster: earn more money or use less money in your budget.
Make a New Year’s resolution to do both. Every dollar you save at a sale or using a coupon, add to your monthly payments.
Start a part-time job or side hustle to earn a bit extra and realize financial freedom sooner.
No matter how much more you get, you must stay steadfast and resist the urge to spend it on frivolous things.
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Commit
More than anything else, you must make a firm commitment to follow these best practices continuously until your debt is gone. That means no new credit cards or loans, maintaining side income sources, and living frugally.
The resolution to put these tips into practice must last the whole year through, or possibly more than one year depending on how much you owe. With a steadfast commitment to financial security, every New Year will carry with it greater freedom and possibilities.
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Hayden Stewart is a public relations specialist for Financial Business Solutions. He regularly produces content for a variety of blogs centered around obstacles and tips for financial solutions for businesses and individuals alike.
