It is easy to pretend everything is fine when you are in debt. Unfortunately, growing debts get to a point where immediate action is necessary to avoid financial strain. Most people, especially those in their 20s and early 30s, tend to be buried deep in debts.
One of the people’s biggest mistakes when clearing debts is not prioritizing them. With proper guidance and financial literacy, you can eliminate debt as soon as possible.
Can you really be debt-free in 24 months?
Find out below.
How to Get Rid of Debt Fast
If getting out of debt is your main priority, there are several directions you can take to eliminate most or a large part of your debt in 12-24 months or less. Below are ten tips and strategies to get you started toward living a debt-free lifestyle.
- Create A Workable Budget
Your first step for every financial decision should always include a laid-out budget. Budgeting helps you prioritize your debt repayments without neglecting other essential expenditures such as groceries and house bills.
In addition, make the most of every penny you get. Since you are focusing on debt repayments, you may want to refocus funds, typically allocated or budgeted for non-essential expenditure, to repay debts.
- Increase Your Income
If your debts are overwhelming you even after budgeting carefully with your current income, chances are you may need to break that cycle. Most people find it hard to manage to pay off debts with one income. Use any other skills to have to make extra cash. You might also consider making extra cash by selling off a few unusable items from your home.
- Negotiate Lower Interest Rates
Interest rates differ across creditors. Unfortunately, some rates tend to be unreasonably high or relatively high, that they affect debt repayments. If you have built and maintained a good relationship with your creditor over the years, they might be willing to negotiate a lower interest rate.
- Cut Out Restaurants and Coffee Shops
While dining in a restaurant or ordering take-out sounds convenient, doing so regularly does not help your spending, especially if you are living with debts. Financial experts agree that minor expenses can hinder you from achieving a significant financial goal like debt repayment. Consider eating home-cooked meals and focus the extra money towards debt repayment.
- Avoid Expensive Hobbies
Whether it is golfing, skydiving, or any hobby that makes you spend a lot, you will lose focus on what is more important to your finances.
- Stop Using Credit Cards
Until you stop making debts a way of life, you will never fully get rid of debts. Avoid the common, misinformed notion that closing a credit card account is a terrible idea. Having a credit card keeps you in a constant loop of debt, which is not good for your mindset and finance.
- Find Accountability
It is hard to say no to some expenses, such as going out to eat with friends. It is crucial to find someone to hold you accountable for your debt repayment goals. Freedom Debt Relief can be your accountability partner in trying to pay off debts. The company provides debt solutions that can help you to become debt free.
- Use Your Tax Refund
Consider the value of cutting down your monthly repayments with one lump sum. Using your tax refund to repay off some of the debt will make the load lighter.
- Use Your Savings
While it may seem unreasonable at first, there is no point in keeping money while you owe someone else money that accrues interest daily, monthly, or annually. Odds are the interest rates on your debt exceed the rate on your savings account. While you should definitely maintain an emergency fund, it’s a good idea to put all other discretionary cash toward eradicating debt.
- File for Bankruptcy
As a last resort, you may choose to file for bankruptcy. However, avoid this as a first go-to solution. Take to a financial or legal expert if you consider filing for bankruptcy to get rid of debts.
The journey to debt freedom can be harsh, especially if you lack the know-how. Can you really be debt-free in 24 months? Surprisingly, yes, you can. With the correct information, plan, and help, you can reduce overweighing debts and enjoy the ultimate financial freedom.
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