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Everyone wants financial freedom, but that’s often much easier said than done.
Paired with average interest rates of over 15%, credit card debt is a major debt burden in the United States.
In addition to rising credit card debt, student loan debt has become a national crisis. There is more than $1.5 trillion in outstanding student loan debt, and a per-student debt average of over $37,000 at graduation.
Top that off with a mortgage and a car loan, and the thought of being debt-free isn’t just stressful, it seems nearly impossible.
When consumers aren’t confident in their ability to get rid of debt, they make decisions that actually leave them in more debt than when they started.
Whether you have serious debt you want to tackle or you want to stop living paycheck to paycheck and start getting ahead financially, there are strategies you can implement to start planning for your financial success.
Here are some quick and easy ways to pay off debt and earn financial freedom.
Credit cards are the quickest way to derail your finances.
Every month you receive a digital statement or statement in the mail, credit card companies are required to disclose “the cost of credit.”
That figure shows you how much it will take you to pay off your debt if you only make the minimum payment on your balance.
If you’re an average household carrying the average amount of credit card debt at the average interest rate and only make the minimum monthly payment on your card, it would take you over 13 years to completely pay off your credit card, and that’s only if you never use it again.
If you rely on your credit card for recurring expenses, such as subscriptions or gas, always pay off that purchase as soon as you make it to avoid any interest accrual.
Cash advances will also quickly add to your balance.
You will often have to pay a set fee based on the cash advance amount, in addition to the regular interest that beings to accrue the very same day you withdraw the cash.
It doesn’t make sense to pay double the fees by taking out a cash advance withdrawal so avoid it if possible.
Lock your cards away safely in your home rather than taking them with you everywhere you go.
While having credit cards may be handy in an emergency situation, the first step to tackling your debt is to stop using credit cards for everyday purchases.
Pick Up a Side Gig
We live in a side-hustle economy, with almost half of Americans having some form of side gig or part-time job.
Some of these hustles are so lucrative that many people are quitting their typical 9-5 job to take on their side gig full-time.
You’d be surprised at what skills and attributes you can monetize, whether it’s online or in your community.
Have a spare room in your home or apartment? Turn it into regular income by renting it out on Airbnb.
Make More Than the Minimum Payment
Once you stop using your credit cards and pick up a steady side gig, it’s time to start making more than the minimum payments on your credit cards, loans, and other debts.
Remember what we said about the average household credit card debt taking over 13 years to pay off if you only make the minimum payments?
When you pay more than the minimum amount, you’re chipping away at more of the principal balance, meaning you’ll owe less in total interest payments by the time the account is fully paid.
While most loans don’t charge prepayment penalties, it’s always a good idea to check the fine print before taking out a loan or a credit card.
If you’re not diligent at allocating your extra funds to debts, or need help assessing your finances to see if you even have any extra to put toward debt, Tally is here to help.
Tally is an automated app that helps you pay down debt faster, saving you hundreds, if not thousands of dollars in interest payments.
When you sign up for your Tally account, just link your credit card accounts along with your banking information.
This will let Tally analyze your credit card debts, as well as your earnings and spending habits.
Tally will automatically put extra money toward paying off your credit card faster, without making you feel like you’re pinching pennies throughout the month.
Create a Payoff Plan
Creating a debt payoff plan is one of the most important steps in the debt management process.
Without a plan, it can feel completely overwhelming trying to tackle your debt.
The Avalanche and Snowball debt payoff methods make it easier to pay off debt faster, with each one providing its own unique benefits.
To use the Avalanche debt pay, list all of your debts in order of highest interest rate to the lowest interest rate.
Make the minimum payments on all of your accounts and put any extra money you have toward paying off your debt with the highest interest rate first.
The goal of the Avalanche method is to save you as much money as possible in interest over the life of your accounts.
By tackling the debt with the highest interest rate first, you’re saving money over time.
When you pay off the first debt, simply take the minimum payment from the first debt and add it to the minimum payment of the debt with the next highest interest rate.
Adding those minimum payments, along with putting extra cash toward your debts, allows you to pay off debt faster.
The more debts you pay off, the easier it becomes to tackle your debts until you’re fully debt-free.
Rather than starting with the highest interest rate and working your way down, the Snowball payoff method starts small.
Instead of paying by interest rate, the Snowball method starts with the loan that has the smallest balance.
Using the same technique as the Avalanche method, putting extra money toward the loan, you’ll quickly tackle your loan with the smallest balance.
Then, simply take the minimum payment and apply it to the debt with the next largest balance.
While this method may not save you as much interest over the life of your accounts, there are significant psychological effects that cause many consumers to use this method over the Avalanche method.
When you start small and quickly tackle a debt, it encourages you to stick with your plan and gives you the confidence to tackle larger and larger debts.
Stick to a Budget to Pay Off Debt
When we say stick to a budget, we mean stick to a lean, conservative budget that eliminates unnecessary spending and makes your money go further.
Cut your expenses as low as you possibly can and eliminate expenses that are not 100% necessary.
While this may seem like an uncomfortable way to live, it’s a way to kickstart your debt payoff plan and reach financial freedom faster.
In fact, many people who choose to drastically reduce their expenses and only live with the bare minimum often feel more fulfilled in life than they did without a strict budget.
An extreme budget is a great temporary solution to tackle even your most stubborn debt.
Refinance Student Loans
Student loan debt is a massive financial crisis, with students piling on more and more debt for their college education.
While the average student loan debt is $37,000 when a student graduates, it’s much more common for a borrower to default on smaller loan balances of under $37,000 than it is for a borrower to default on loan balances over that amount.
Students who take out less in student loans often don’t have a solid repayment plan in place, which is why it’s more common to see a default in lower balances.
Whether it’s poor financial planning or insufficient income, defaulting on a student loan carries severe consequences that can take decades to recover from.
Private student loans can be as much as 10% or more, and with large balances, that can result in payments of well over $1,000 per month in student loans.
Refinancing is a great way to control your monthly payments, reduce your interest rate, and even unlock payment plan options that make it easier to pay your student loans.
Many student loan refinance companies offer extended payment plans on balances over a certain threshold, or offer reduced interest when you enroll in autopay.
We do caution from refinancing federal student loans with a private loan servicing company.
Federal student loans offer repayment plans and benefits that are not available through private lenders. Be sure to thoroughly research your refinancing options before you move forward with refinancing federal loans.
Credible is a financial product platform that matches borrowers with financial solutions that meet their needs.
This includes student loan refinancing and loan origination to help pay for your education.
Credible can help with private loans, refinancing loans, student loans without a cosigner, and so much more.
Rates start at just 2.48% for variable interest loans and 3.05% for fixed interest loans.
This can significantly reduce your interest and monthly payments, making it much easier to tackle your student loan debt.
In addition to connecting you with a network of student loan refinance options, you can take advantage of Credible’s free student loan resources to help you understand how to manage and conquer your student loan debt.
Stay on Top of Finances
There are tons of great resources that can help us stay on top of our finances.
From simple financial calculators to automated financial management, you can download powerful financial apps right to your phone to help you manage your money and get out of debt faster.
Here are our top recommendations.
Paribus analyzes your purchase information via email or your financial institution.
When Paribus detects a drop in price on a product you purchased, it will help you get a refund on the price difference between what you paid for an item and its current price.
There are some companies that only offer a limited time to request a price protection refund, and when you sign up for Paribus, you won’t miss your window of opportunity.
Paribus has helped its users get back more than $24 million in price protections.
It’s time that you start getting price drop refunds and start putting that extra money toward your debt.
Truebill is a leading robo-negotiation app, created to automatically reduce your monthly bills.
Just connect your service accounts such as your phone bill, cable bill, electricity bill, and even your credit card bills to have Truebill negotiate prices and interest rates on your behalf.
In addition to powerful artificial intelligence that will negotiate your bills for you, Truebill can also detect recurring subscriptions and can help you cancel those subscriptions right through the Truebill dashboard.
Upload your bills and connect your bank account information to get a personalized bill calendar that will remind you of upcoming due dates. This calendar can also provide you with personalized suggestions for your finances.
Truebill helps you pay off debt quicker by negotiating your bills and canceling your unwanted subscriptions, allowing you to use that extra money to pay off more of your debts.
These are just a few of the financial tools that you’ll get in your Truebill account.
Negotiate Your Way to Lower Bills
Many people don’t realize that bills are often negotiable, especially in the utilities and services sector.
In fact, you can save so much money by simply negotiating your bills that there are now sites and apps that automatically negotiate your bills.
When it comes to bill negotiation services, there are very few that come close to the quality and reliability of Cushion.
If you’re not confident in your negotiation skills or simply don’t have the time to contact each of your service providers, Cushion is here to help.
Using state of the art artificial intelligence and machine learning, Cushion connects with your service providers and negotiates your bills via instant message or email.
Signing up for Cushion is incredibly simple and allows you to link your bank information and upload your bills for review.
By saving you money on your bills every month, Cushion unlocks funds that can be put toward your debts, helping you pay off debt faster and become financially free.
Have any more debt payoff tips, or have a story about paying off your own debt that you’d like to share? Let us know if the comments!
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