17 Brilliant Ideas to Pay Off Debt Faster than Ever
Incurring debts suck. There is no way around that.
For the majority of the American population, debt absorbs life. If time and money permit, you always pay your debts quickly.
Of course, there are ways to use debt to increase wealth, but for most Americans, we have a love-hate relationship with debt. We like to use it and hate carrying it.
How can I pay the debts?
Some of us treat debts as an unhealthy relationship. We know we should settle our debt quickly, but we are too comfortable doing anything about it. This was the point where I was.
One of my decisions is to completely settle the debt. We have just under $10,000 left. In September (starting in 2016), we fully repaid the two largest debts totaling $26,000. In October 2015, we set ourselves the goal of paying them back as soon as possible. I was expecting that we could pay them by August 2016. A month late, but we did it!
We paid $26,000 in 11 months!
This saved us $584.48 a month. What would you do with nearly $600 more a month?
For some, this means that you can finally go on vacation. For others, it means you can finally save for the new home or start a new career. But for all this means freedom.
Freedom is ringing and you are being asked to repay our debts more quickly.
From October 2015 to September 2016, I deliberately and concertedly tried to repay our debts as quickly as possible. It was not easy. In fact, it was quite difficult. I will not coat it with sugar. Debt repayment requires a lot of work. It will not be easy for you, but I can promise you that it is worth it.
What strategies can you use? Let’s take a look.
17 Helpful Ways to Pay Off Your Debts Quickly
Well, some of them I developed myself and others I found elsewhere, but I used most of them. I can assure you that they all benefit when you pay your debts and, in any case, accelerate your progress.
1. Debt repayment according to the snowball method of debt
So this is the first thing I wanted to do from the beginning to pay off our debts, and I still use it to this day. In Classic Snowball Debt Mode, put everything you have on the lowest debt in the account. Pay the minimum monthly payment for everything else.
Then, after paying, use the money you used to pay the first debt and combine the snowball or combine the money with the immediately lower debt payment.
In essence, you pay the same amount each month until you settle your debts.
The power lies in the snowball.
The beauty of this method is that it does not require a lifestyle change after paying for something. They are already using this extra money for their debts. Why do not you continue to repay your debts faster?
So let’s say. If you do not use this extra money to repay the debt quickly, it can potentially add months to your payments and a lot of money to your total debt. The faster you pay, the less interest you pay.
2. Get a side-hustle
Do you have a hobby that you really like? Maybe you can really crochet well. Maybe you have a talent for music or art.
Why not make money?
On weekends you can find a job in a restaurant. If you know the camera, you can record weddings on weekends. Make a music album and sell it!
Side-Hustles can be a great way to increase your income by a lot of money! What are you doing with the money? Why pay your debts faster, of course.
Here is a list of more than 100 ways to earn a little more money. There is something for everyone on the list. Find something you like and earn extra money.
3. Consider your monthly payments as a source of inspiration
It may sound funny, but your monthly payments can give you the inspiration to continue.
While I was working to pay the $26,000 in 11 months, I always thought I had made all these efforts to release $584.48 a month. It really kept me going!
What would you do with the extra money? That’s more than $7,000 a year.
You can invest that money or save it for a family vacation, or just settle in if you know you have a small pillow for your monthly payments.
4. Adjust your tax deductions
One of the easiest ways to increase your income each month is not employment. It’s about the IRS.
The IRS reported in February 2015 that the average refund of the tax was $3,120.
That’s a lot of money.
This $3,120 would bring you $260 more per month! Imagine what 260 US dollars would help and more.
I adjusted our deductions for my wife and myself to minimize the number of our returns. Then I used this extra monthly income to pay off our debt and we had a bigger snowball from the start.
I will try to say this as well as possible:
Stop the IRS with an interest-free loan.
I guarantee you know how to manage your money much better than the government.
Related Topics: How to get the maximum refund possible
5. Use extra checks to pay off your debt quickly
If you are paid every two weeks, something spectacular happens. As there are 26 payment periods, you will be paid three times twice a year, rather than as usual.
Use them to your advantage!
Budget, as usual, every month, only two paychecks. Then you will literally have a full paycheck twice a year to impute your debts. You talk about an accelerator!
My wife is paid every two weeks while I am twice a month. There were two months during that 11-month period during which we were able to carry out an additional audit on his part. This brought us some of our debt and significantly accelerated the repayment.
6. Use the windfall profits to repay the debt
If you work for a job with a performance incentive plan that pays bonuses for a good return, the money is ripe for repayment of the debt!
Because of my performance and performance, my bonus was $1,700 after tax. It’s $1700, which I needed nothing else. It was all extra.
I put this directly on our debts and it was huge! This premium only reduced our $26,000 debt by 6.5% because we did a good job at work.
If you receive a bonus and there is no urgent financial urgency to use, use it to pay a large portion of your debts.
7. Use your emergency fund
How to pay your debts and get out of debt quickly
It’s something you can not all agree with.
If you are investing a decent sized emergency fund and a decent amount in your debt, we recommend reducing your emergency fund to $1,000 and using it to accelerate debt settlement. That’s the same $1,000 that Dave Ramsey suggests in his first step.
We reduced our emergency fund from $9,000 to $1,000. We examined the likelihood of a financial emergency and the time it would take us to build the fund as it was when our debts were paid before the decision.
After all the calculations, we decided that the benefits far outweighed the risks. We pulled the trigger and our $8,000 debt disappeared immediately! It felt amazing.
I am fully aware that this is not a method for everyone. It is comforting to have an emergency fund of reasonable size.
And that’s the point.
can not stress this point enough. If you use an emergency fund, use only what suits you best. If you are not sure about using something, make sure to keep your emergency fund in stock.
I urge you not to go below $1,000 in case you have any of these unforeseen emergencies.
8. Reward yourself
I did not want to live in poverty but simply pay off my debt quickly. In my opinion, this is not the way to be a slave to your budget, so you do not have to be a slave to your debts. It makes no sense to negotiate slavery for slavery.
If I cut the budget money for fun, I would go crazy and I would not do anything.
When I decided to reduce my debt, I especially made sure that we had enough time to keep our vacation. While we had settled all this debt, we went to Disney World twice, as a couple spent a weekend in Colorado and a family week in Colorado.
For both trips to Colorado, we decided not to fly. The decision to make the 14-hour trip saved us about $ 3,000 for both trips together.
Another way to keep our vacation was to make sure we met our other budgets. We made sure we were not going for family budgets or night outings. If we did not have the money in the budget, we would wait until next month.
We definitely adjusted something, but we wanted to make sure we were still alive and did NOT reduce the budgets we had for fun.
Speaking of budget …
9. Use the remaining budget
It’s easy enough, but it’s powerful. If you are planning $100 a month for something and this bill is $80, then put $20 on your debt.
I often do it with our fuel economy. Gas was reasonably cheap across the country compared to a few years ago. I have not adapted our gasoline budget until recently to cheaper gas.
What was left in our gasoline budget at the end of the month was immediately in debt. Sometimes that amount was $50 to $100.
The use of the remaining budget funds can be particularly effective if it is carried out with few budgets and not one.
10. Put your increases towards debt
What happens normally when you receive a salary increase? Maybe it’s just my passion, but I have to stop myself from saying, “Yes, I can spend more !!”
Do yourself a favor and do not do that.
The official term for this is called lifestyle inflation. In simple terms, lifestyle inflation means spending more money to offset the increases you have received.
Why not put all this extra money into debt? Suppose you get an increase that adds $300 more and you’re used to having only $100. You can keep your pillow at $100 and put $300 directly into your debt each month.
That’s what I did, which had a big impact on our debt balance. It took literally several months for the debts to pay our debts! A salary increase is not an authorization to spend more. It is a chance.
Will is the most powerful weapon in your arsenal. Without a will, most of these other steps would not even be feasible.
You may need to change your mind like me. You may need to choose a reward that you will only receive if you pay your debt quickly. So keep an eye on the price. It can be as simple as an inspirational quote that you send every day to your inbox.
Do everything to keep your will. Reward yourself for every credit card you pay. Buy a coffee. Take the time for yourself. These steps are there to help you, but you have to do it.
The beauty of this is that the will is like a muscle, which means you can train it.
Do not make too many twitchy tasks at the same time. Otherwise, you will exhaust your train and derail your train.
12. Change your attitude towards money
The Webster dictionary defines the state of mind as the attitude of a person or a set of opinions about something. This attitude defines and informs everything from our vision of the world and others to decision-making.
If you change your attitude towards money, you can think of it as a tool rather than a master. Once you realize that you control your money and not the other way around, you can use it as you wish. You can let him work for you.
To change the way you think, try to artificially reduce yourself by depositing a portion of your check directly into your savings account. Budgeting for fun (as mentioned above), as well as generous, are other ways to change your mindset.
13. Change of region
Well, that sounds a bit extreme, but moving to another part of the country to reduce your cost of living can dramatically increase your disposable income.
Of course, you want to do your homework first. You may need to look for a new job if your company does not have an office where you work. You also want to make sure you have everything around you. It may be interesting to find a place comparable to what you now have in terms of amenities, shops, restaurants and entertainment.
Why is it useful?
According to Sperlings Best Places, a comparison of the cost of living in Denver (Colorado) and San Francisco (California) shows that a salary of $375,000 in Denver should be $801,765 to compare.
It’s more than double the salary to have the same standard of living in San Francisco!
Your city can stifle your ability to repay your debts quickly. Even moving from the city to a suburb can save a lot of money. Moving can be worth your time and effort.
14. Move back home
Now, I realize it will not be for everyone. However, your lease or mortgage payment is usually the highest monthly payment. If you had to delete this payment, you would spend a large part of the currency every month to increase your debt.
If you are in a place in your life where you could easily return to your parents, this could be a great option for you. Of course, you want everyone to agree. If you are single, it’s a little easier. You just have to talk to your parents. If you are married to children, it is feasible, but it will be more difficult to buy them all.
Nevertheless, it can be interesting to watch.
If you now pay $1,000 in rent, you will even pay a small rent if you pay a small rent to your parents. It’s a big step forward, but not for everyone.
15. Impulse saving
We’ve all heard about Impulse editions, right? There you see something in the store that you did not want to buy and buy it “spontaneously” (hence its name).
Well, I like to call it the impulse savings.
The idea is the following. For example, if you’re in the store and you’re watching a $20 movie you do not really need, instead of buying that movie, transfer that to your savings account.
Boom! Record the impulse.
To use this trick on your debts, simply use the money from the saved impulse to invest your debts instead of saving them. Either you have a lot more money to pay your debts, or you learn to control your impulsive expenses (or both!). Not a bad result.
16. Sell your extras
After the holidays, chances are you’ll have extra things at home that you will not want or need anymore. A good way to make money to pay off your debts quickly is to sell them.
Do you have extra DVDs that you do not hang out? What about extra toys, video games or bells and whistles in the basement? Pack them and sell them!
Try to sell the items you barely use, sell them at a flea market or on eBay, and use that money to pay off some of your debt.
17. Registration bonus for new bank accounts
Every two weeks, we receive an email in the Chase Bank email, with which we can provide up to $500 to open a new account: $300 to open a direct debit account and a payment account. $200 more if we put $15,000 into a savings account for three months.
We have not done it yet, but it’s on the to-do list. Even if you do not have $15,000 for the $200 bonus, you can get an additional $300 by opening a checking account and using direct deposit. Put this directly on your debts!
The finish line is in sight
Debt has been a thorn in my side for much of my adult life because I depended on interest-free financing. I was able to overcome this largely by changing my attitude towards money.
That’s why I set myself the goal of paying off our debts. Once we have repaid our remaining debt of almost $10,000, only our house remains.
This smell? I feel the freedom! Take one or all of these 17 steps and I guarantee you that you will repay your debts quickly.