How to Get Out of Debt Fast – 7 Main Steps

The debt of an average American is skyrocketing, and many are dealing with overwhelming financial struggles. As the saying goes, ‘desperate times call for desperate measures.’ So, many American households are looking for information on how to get out of debt fast. How can you manage your payments, get out of the bull’s eyes of creditors and save your credit score?

the words debt relief scrabble letters

Dealing with a debt crisis can bring on a lot of frustration and stress. However, there are ways to approach debt and make it more manageable. We have gathered the top tips from financial experts on how to get out of debt fast. We hope that the following tips will help you find a financial peace of mind.

How to Get Out of Debt Fast

Debt can be an overwhelming thing to deal with. However, with the proper advice and planning, you can get out from under the shadow of your piling bills. There are many different types of sources that debt can come from. The most frequently cited reasons for debt is student loans, credit cards, and car loans. It might take a while, but there are steps you can take to help manage these debts.

a pile of credit cards

The quicker you get the debt paid off, the better. Not only will you have saved on interest, but you will also be done with the stress of dealing with hefty monthly payments. You might think that living in ignorance is the answer to dealing with debt.

However, ignoring your financial situation will only result in disastrous outcomes. For example, you will have a hard time every owning a home, buying a car or securing lines of credit. Become familiar with your financial situation and create a plan on how to make it as manageable and possible. The future you will thank you.

Top 7 Steps on How to Get Out of Debt Fast

1. Find Clever Ways to Make Some Extra Cash

some dollar bills under a rolling pin

It is pretty simple. The more money you have coming in each month, the more you are able to put towards paying off your monthly debt. Find an effective way to make a little extra cash on the side. For example, do you have a creative hobby?

Find a method to share your talent with others. One woman reported making around a thousand dollars a month crocheting scarves and hats for local craft fairs. Handmade wares can be extremely moneymakers.

Another simple way to make some extra money is to get a part-time job. Services like Uber or Lyft, are great opportunities for someone looking to make extra income in their spare time without making a big commitment. Don’t forget traditional ways of making money, such as babysitting, cleaning or handyman services.

2. Utilize the Debt Snowball Method

You might have heard of the debt snowball method. It all begins by listing all of your debt and outstanding balances from smallest to biggest. Then work your way down the list. Put the majority of your funds towards the smallest amount of debt, while you continue to pay the minimum amount on to the other debts.

As you pay off the smaller debts, you are working your way to the biggest. This will create a snowball effect, allowing you to pay more towards bigger debts. Eventually, you will find yourself debt free.

3. Create a Budget

dollar bills in the shape of a pie chart

Even if you don’t find yourself struggling with crippling debt, a budget is still a healthy way to manage your finances. Write down all your monthly expenses, from bills to spending money expenses.

Then, using your monthly income, find out how much money can be spent on each category. A budget will help you from overspending on frivolous things and keep an eye on debt or important bills. This is also a helpful way to see your money spending habits.

4. Pay More Than the Minimum

Mostly all debt, especially credit cards and student loans, accrue interest this month. This means the total amount you will spend to pay off your balance will increase. This is the reason that it is so important to pay more than the minimum payment each month.

Try to put as much towards the debt as possible. Before making a large payment, check with the credit company and make sure there are no penalties for paying debt off early.

5. Negotiate with Collectors

If you find yourself unable to cover monthly payments or feel as if a balance is too high for you to find the means to pay off, don’t be afraid to call the company. Most debt collectors are willing to negotiate. Some will even be willing to work out a better payment plan or even lower your balance amount.

Sometimes once a debt has been out for so long, collection agencies are willing to settle for a less amount just to get the account closed. Don’t ignore debt collection calls. Answer the phone and be completely honest with your financial situation. You might find that they are willing to work something out.

6. Don’t Be Afraid to Ask for Lower Interest Rates

a big red zero percent sign

Speaking of talking with the credit company, another topic you shouldn’t be afraid to bring up is interest rates. Some companies might be willing to negotiate a lower interest rate, which means more savings for you.

7. Drop Expensive Habits or Indulgences

An obvious step to help create more income that can go towards outstanding debt is dropping expensive habits, such as that daily Starbucks latte. It is pretty incredible to see how these small daily indulgences can add up each month. Making sacrifices like this is key on how to get out of debt fast.

Bottom Line

Using these simple tips is the perfect answer for how to get out of debt fast. Whether you have a small amount of debt or a crushing total, it is possible to achieve a financial peace of mind. Start now and remember that every dollar counts. What strategies or tips do you have for how to get out of debt fast? Have you tried them? Tell us your debt stories in the comments below.

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