Having some debt may not hinder you long term but it’s always a good idea to get it paid off and not have the debt hanging over your head. Debt can lead to financial stress, cause marriages to end, and even lead to bankruptcy.
1. Write out a zero-based budget. When you have a written a budget you have a plan. Let’s say you make $40,000 a year. Over a ten-year period that’s $400,000 going through your hands. If you ran a business that made $400,000 would you just move through life without a plan with that kind of money? NO!! When you have a written budget, and follow it, you see where your money goes and how it’s being spent.
2. Work the Debt Snowball Method. This method of paying off debt has become very popular in America over the last 20+ years thanks to famed author and national radio host Dave Ramsey. The Debt Snowball method is easy. You take all your debts and list them from smallest to largest regardless of interest rate. Once you pay off your smallest debt, let’s say was $25 per month, you then roll it into the next smallest debt. For example, you paid off a $25/month debt so you take that $25/month and add it to your next debt; let’s say it’s $30 per month. So now you’re sending $55/month to your second debt.
3. According to US News: Money, another great way to pay off debt is to take advantage of balance transfers. Most credit card companies offer 0% for balance transfers for a limited number of months; for example, 0% for 24 months on new balance transfers. As you work to pay off debts, you can do so at no cost. You simply pay the balances down over the specified term that you have the 0% rate and once that term approaches it’s end you simply move the balance again to maintain the 0% interest rate. Be careful, though, as some companies will charge an annual fee or will charge a fee based on the percentage of your balance transfer.
4. Sell some stuff and put any extra earned money towards your debts. Most people out there today have so much “junk” that they don’t even know what to do with it. You can sell that “junk” to other people who would have a use for it. You can also put earned bonus money towards your debt to pay it off faster. And if you want to get really crazy, you can always take a 2nd job and use that money strictly for paying off debt.