Becoming debt-free is incredibly hard, it requires many personal sacrifices and several lifestyle changes. Getting rid of debt is like taking off a “800-pound Gorilla” from your back and an incredible freshness returning back in your life.
Just 1 year of a well-planned lifestyle can make the impossible, POSSIBLE!
We are about to say goodbye to 2020 and welcome 2021. This means that now is the time to start pondering your financial future. You see many people pen down extensive new year’s resolutions, but are forgetting the most crucial thing – getting their finances in order and becoming debt-free.
When you’re in debt, it’s much harder to be financially successful because a huge junk of your money goes to making payments and paying interest. There are many things you can do to become debt-free, even adopting 7-8 tops mentioned below can make a huge difference in your life.
1. Make a Budget
Absolutely the most important point !! The road to no debt starts with becoming cognizant of your monthly earnings and spendings.
Many people despise budgeting as it takes a lot of detailed work, discipline and planning. However, a budget is the actual road map that will guide you to becoming debt-free. Budgeting allows you to focus your money on what matters most: day-to-day spending, controlling those compelling urges and gradual wealth-building. There are many free budgeting apps online that not only provide clear insights into your debts and spending habits but also provide valuable tips to pay off your debt more easily.
2. Get your APR lowered or switch to a 0% rate Credit Card
Now that you have broadly established your roadmap to become debt free, you might want to go to the next level and check if your eligible for a 0% balance transfer accounts/cards.
If you are, it would be wise to transfer your credit card debt to a credit card company that offers a 0% Intro APR Purchase and Balance transfer. Companies such as Chase Freedom Unlimited, Discover it Cash Back, Bank of America credit card, Blue Cash Everyday Card from American Express, Wells Fargo Cash Wise and Visa, are all offering a 0% Intro APR Purchase and Balance transfer period for approximately 15 months.
This is great, as it allows a switch to a 0% interest credit card and avoids paying interest in 2020. The interest money that you save can go towards paying off your debt. But make sure you can pay off your debt within these 15 months to not risk the chance of paying the standard or higher interest rate.
3. Increase credit score through automation
The amount of debt you have is one of the biggest factors that go into your credit score. A low credit score directly impacts your ability to pay a low insurance rate. One of the key ways to increase your credit score is by automating payments. People underestimate the damage they can do to a credit score by simply missing payments by accident. Hence, it is best to automate your payments and regain a high credit score
4. Set Financial Goals
Tell yourself that I am going to save 50% of my earnings, no matter what. Shift to a lower-cost housing unit, cancel all those extra services which you can live without. If others are running after a gadget, you don’t have to.
The truth is, being in debt restricts you from living your best life. When you set financial goals, you’ll be eager to pay off your debt as fast as you can to accomplish the things you truly want.
5. Fixed Monthly Expenses
The mortgage and utility bills are fixed expenses that you must pay monthly and are typically considered to be non-negotiable. While this is true, with some proper planning and possibly an upfront investment, you can still reduce them. Take your mortgage, for instance; you might view it a fixed expense, but there are certain actions you can take to offset this expense such as rent out a room in your home or downgrade to a less expensive home. In addition to that, you can shop around for a lower interest rate or refinance with your current lender.
6. Plan your Grocery Trips
Grocery shopping is a mandatory recurring expense, there is a way you can save money on your grocery shopping. The best way to do this is to make a list and stick to it. Also, choose one day in the week to go grocery shopping. Make sure to purchase everything you need, so you won’t have to visit the grocery store for a second time or order your groceries online and then pick them up curbside at the store. More trips to the store means more fuel you burn, more things you see inside the store and the urge to buy extra things. Businesses around us are built so that we spend money on them, this very urge must be controlled.
7. Start Couponing
Couponing can save you a lot of money on your grocery trips. Imagine having a nice chunk of your bill covered by coupons, wouldn’t that be great? Be sure to only use coupons for products you already buy, to not end up overspending on items you’ll never use.
Not using coupons is like leaving free money on the table.
8. Save for Purchases Instead of using Credit
I get it; credit cards / Apple pay etc., all are extremely convenient, but they can also put you in-debt easily. Instead of using credit cards, save for the things that you want and need and only purchase them when you have enough funds to do so.
In fact, switch to the old-fashioned way. Start doing shopping with cash. When you count those dollars with your own hands before making a payment, you will automatically watch your spending closely.
9. Try Consignment Shopping
Let’s be honest; you don’t need the latest designer clothes or a bunch of new clothes every season. Consignment stores are known for their nice quality and in excellent condition pre-loved. And they sell them at a fraction of the original cost. Or at least go to discount stores like Ross, even if you hate them currently. Live like of a lower-middle-class person.
10 Cut the cable
Do you need cable in this day and age when you have Hulu, Netflix, Disney+ and Amazon prime? Nowadays, you can even watch movies for free online. So cut the cable and put that $100 towards your debt each month.
11. Find free entertainment
You might be accustomed to spending huge bucks for entertainment. This is not very wise when in the process of becoming debt-free. Challenge yourself to find free ways to stay entertained. Take the kids to the park, go for a walk or a hike, enjoy a free concert, or look for a free event in your community.
In fact most free outdoor entertainment activities are healthiest for you. Being a couch potato will only make you fat, lazy and sick. Forget what others will say or think, those same people will give your example to others when you reverse your life by 180 degrees in 1 year.
12. Eat out less
If your goal is to become debt-free in 2020, it is best to reduce your restaurant visits. While eating out is easier than cooking at home; it hurts your purse.
You don’t have to become a boring person for that. Instead of meeting up at a restaurant with friends, have them come over for a home-cooked food instead.
13. Don’t Spend to Impress Others
It’s human nature to want to impress the ones around us – especially when we are young. But that is foolish that is as it will leave you with a pile of debt and stressful bills. It is better to work hard to pay off your debt.
Tell your girlfriend or boyfriend or spouse that you really need their support to achieve your 2020 goal of becoming debt-free. This may impact their lifestyle as well, but our close ones are meant to support us, not to break us.
14. Avoid Expensive Hobbies
You might love to play golf, craft projects, etc.? But do you really have those extra dollars to spend on these hobbies? If you plan to become debt-free, you might start to look for other alternative hobbies that you will enjoy without having to dig deep into your pocket.
15. Find Cheaper Alternatives
It is not uncommon to feel a little bit restrictive and deprived while on your mission to a debt-free life. To curb this feeling, find cheaper alternatives for things you spend money on daily. So instead of going out for lunch, take your lunch to work and save some money.
Go for that 2nd hard car. Buy a cheaper phone. You can get that haircut from a cheaper salon. You don’t have to shop from Reebok and Nike necessarily. May be you can get a cheaper insurance from a different company.
16. Start a Side Gig
Cutting your budget, free entertainment or couponing are great ways to save but are still limited. To become debt free fast, try to make more money. Thankfully there are many ways to do that. You can become a part-time uber driver, a part-time nanny, a dog walker or pet sitter. A mystery shopper or take paid online surveys. Start blogging and earn money from Google Adsense. Try Freelancer or Fiverr and get paid for writing articles or making a video for others. All these are great ways to earn an additional income that can go towards paying off your debt.
17. Sell Items Online
eBay, Craigslist and Facebook marketplace are all great platforms to sell items you no longer need to make some quick cash. But you don’t have to stop there. People are earning a lucrative income on the internet. Consider any skills you have that you’ll be able to turn into a physical product and earn extra cash with.
18. The Democratic Party’s Plan on Student Loan Debt
Ever since the announcement of their candidacy, these two democrats – Elizabeth Warren and Bernie Sanders have loudly shared their thoughts on student loans and medical bills. Both have promised to wipe out student loan debt and medical debt if they become president. This is great, as most Millennials are drowning in student loan debt and boomers can’t seem to pay their medical debt. If these candidates fulfill their promises, most people will see an instant deduction in their debt.
19. Donald Trump’s low tax Slab Promise
On the other hand, the Republican and current President of the United States “Donald Trump” is also making promises that will benefit the people. If he keeps to his promises than tax slabs will remain low. This will allow you to use your extra savings to pay off debt. Democrats will likely increase taxes to fulfill their promises.
20 Build an Emergency Fund
Once you’ve got control of your spending, it’s time to start building your emergency fund. Your emergency fund acts as a safety net during Financial emergencies – which happens all the time. The emergency fund is going to prevent you from accumulating new debt. The easiest way to build an emergency fund is by treating it like any other expense that you need to pay every month.
Wrapping it up
There you have it – 20 ways to get out of debt and breathe fresh air into your finances. Try these tips and see which ones work for you. The journey to a debt-free 2021 will require dedication and some sacrifices. Over time, you’ll reap the fruits of your dedication.