Here's What You Need to Know to Pay off Debt Effectively - Hassle Free Savings

Here’s What You Need to Know to Pay off Debt Effectively


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Nobody wants to be in debt. However, if it were easy to repay debt, people wouldn’t need to worry about this issue. It’s a fact that getting into debt is much easier than getting out of it.

This is why people struggle to manage their debt. But it can become a hassle-free process if you make up your mind to follow certain steps to pave your way to financial freedom. Are you ready to know more about these small steps? The following steps are practical and effective ways to pay off your debt.

Make a Sensible Budget

Pay off Debt Effectively

We all should make this a habit. However, this is even more important if you’re in debt. There are many budget tracking apps available, and one of them should be used to keep track of your expenses.

If you’re not tech-savvy or prefer the old-fashioned ways of book-keeping, you should keep a diary where you make detailed financial plans for your earnings and expenses. Making a sensible budget and sticking to it is the first step toward repaying your debt.

Some components of a ‘sensible’ budget are:

  • Reasonable spending on essential items
  • Complete avoidance of splurges and impulsive purchases
  • No budget for luxury items or experiences, for example: fine dining
  • Prioritizing expenses

Once you start following a budget that justifies your income, you will find more savings in your account at the end of the month. You can use this amount for repaying your debt and getting rid of it faster.

Use Available Cash

Pay in cash

We all have those sudden moments where we receive unexpected cash. A tax refund, or a gift from our grandparents can bring us a surprise surplus.

However, if you are in debt, the wisest thing would be to devote it toward repayment of your debt instead of splurging this sudden windfall.

Since this money was unexpected anyway, you won’t feel like you’re missing out if you don’t use it for shopping or dining. Using all available cash wisely is a great way to repay your debt, step by step.

Look for Side Hustles

Side Hustles

Side hustles are a very effective way to find some extra cash by which you can repay your debt quickly. Thanks to the digital age, there is no lack of freelancing and work-from-home opportunities.

Use your spare time or weekends to do a side hustle that will fetch you some extra bucks and allow you to get rid of that mounting (but soon-to-be shrinking) debt.

Need ideas? Consider baby-sitting, tutoring, content writing, blogging, writing product reviews, working over the weekend, assisting the elderly, dog-walking, etc.

Not only will you get to learn something new, you will earn money that can be used for paying off your debt.

Plus, you’ll remain occupied and will not go shopping or eating out. This will further assist your financial management strategy.

Follow a Set Method

Debt Elimination Method

There are plenty of debt resolving methods doing the rounds. A couple of examples are Snowball method and Avalanche method. Research about a few of these methods and follow one properly.

These methods are proven to help in repayment of debt quickly. If you’re able to commit to one of them, you will be motivated to make lifestyle changes and become aggressive in getting rid of your debt.

There are pros and cons of each method, and you should make sure that you do your research properly before starting with any.

Once you do start, however, don’t lose momentum and try to make it through all of your debt. You will find plenty of information online, so just log on to your computer and browse away.

Hold a Garage Sale

Garage Sale

If you look around your house, you’ll find many items that you either don’t use anymore, or that you don’t really need. Make a list of these items and sell them off on online forums or hold a garage sale and make some money out of these existing resources.

There are many benefits of this step. First, you will get cash in hand immediately, and you can use it toward your debts. Secondly, you will declutter your house and suddenly get a feeling of more space.

You also won’t have to spend as much time and effort on maintaining items you barely used. With those items gone, you will save your time on doing things that are beneficial to you, for example, a part-time job at this stage.

Don’t use Credit Cards

cut your credit card

While credit cards have many advantages, they spell disaster for people who are already in debt. Since you don’t have to pay immediately for the purchases you make with credit cards, it is very easy to grow a large amount of outstanding debt.

If you absolutely have to use a card, use your debit card. This way, you can only spend what you have in your account. Once you get rid of your credit card bills, you will find it much easier to manage other finances and repay your debt.

Change Your Lifestyle

There are plenty of money managing apps and financial trackers on the market, and some of them are even available for free. But the biggest difference in our financial scenario is only made by our lifestyle and habits changes.

If you can spot a habit that results in too much spending, it’s time to cut it for good.

For example, if you are an impulsive shopper, you should take inventory of your existing collection and remind yourself that you don’t need anything new at the moment. Similarly, if you like eating out, then it’s a good idea to start cooking at home.

You might feel the pinch of these sudden changes in the beginning, but when you see the money that you were able to save as a result of these changes, you won’t regret it.

There is no magic formula to get rid of your debt overnight. This process takes a few weeks to months, depending on your outstanding amount. However, it is possible to tackle this issue smartly and make monthly adjustments that can dig you out of your debt.

If you are motivated to start your debt-removal plan, make sure that you do ample research beforehand to avoid any unpleasant surprises down the road.

Be aware that it is natural to get demotivated in the middle of this journey because of cash crunch and alteration of your habits. But don’t give up! If you forge ahead on this difficult journey without faltering, you will be rewarded with freedom from your debt.

April Lee

A little about me: I'm a single, working mom who knows what it is like to be deep in debt. There was a time in my life where I was even caught in the vicious payday loan cycle just to stay afloat. Now, I'm debt free and saving for a home. I love educating others and want to share the ideas and strategies that allowed me to pay off debt and continue to live within my means.

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