A recent Bankrate survey found that once the country starts recovering from the coronavirus, 22% of Americans plan to make paying off debt a priority. That sounds nice, but as the saying goes, “Don’t put off until tomorrow what you can do today”. Here are some things you can do right now to reduce your debt.
Change your spending habits
You can’t keep doing the same things and expecting different results so it’s time to make some changes. No more buying things you don’t need and adding to your debt. Eliminate the temptation to shop by unsubscribing from your favorite retailer’s email list. Implementing a 24-hour rule can also help you curb impulsive spending. If you must purchase a big-ticket item, give yourself time to save up the cash instead of taking out a loan or swiping your credit card.
Increase your income
If you’re living paycheck to paycheck like most Americans, chances are you don’t have much money left over to put towards your debt. Rather than make excuses, you need to look for ways to increase your income. This may mean working a second gig or selling items you no longer use. If you have a spare bedroom in your home, renting it out is also an option.
Use a budgeting app to manage your money
No one has an endless supply of money. Therefore, we all have to be mindful of our spending. Using a budgeting app can help you manage your money better. You can track your expenses and see what’s available right from your phone. Utilizing a budget also makes it easy to see which bills can be eliminated to free up extra cash.
Prioritize high interest debt
When the goal is to become debt-free, you can’t just sprinkle a little money across all your bills. It makes more sense to focus your efforts on paying off the highest interest debt first. Doing so will save you money in the long run. Just be sure to continue making the minimum payments on the rest of your bills.
Lower your interest rate
When your interest rates are in the double digits your debt can quickly get out of control. No matter how hard you try to get out of the hole, it can feel like you’re barely making any progress. Luckily, there are things you can do to lower your interest rates. The first option is to call your credit card company and try to negotiate. If that fails, consider getting a balance transfer. This will allow you to move your debt to card with a lower rate usually 0%. Just keep in mind that there is a fee attached. The promotional rate is only good for a limited time, so work quickly.
Pay more than the minimum balance
If you’re serious about getting out of debt, paying only the minimum balance won’t cut it. You need to dump as much money as you can into paying it off. An easy way to make a bigger contribution is to make multiple payments throughout the month. You can also apply your tax refunds, bonuses and any other windfalls you receive throughout the year towards your debt.