6 Powerful Tips to Get Out of Debt in 2020
A debt elimination plan is your best tool in getting out of debt this 2020. It is easy to set up but challenging to follow. Nevertheless, your best move is to get started. Use the energy of the New Year to get rid of your debt once and for all. Use the expert tips below to take control of your finances and start your debt-free journey.
1. Tally all of your debts.
Create a list of everything you owe – student loan debt, credit card debt, even money that you owe to family or friends. Add the amount, as well as the interest rate. Write them from the highest to lowest interest rate, and tackle them in this order.
2. Commit to a budget.
Writing a budget is not enough. You must commit to it. Follow your monthly budget to eliminate debt. To make it faster, cut out extra spending, especially unnecessary ones or luxuries. Postpone getting a new streaming subscription or getting your nails professionally done. You can also cut your cable, find more ways to spend less on food and skip shopping until you are debt-free. If you can free up to $300 monthly and funnel it to debt repayments, it will make a massive difference.
3. Set up an emergency fund.
Creating savings goes hand-in-hand with debt elimination. Start to build an emergency fund by setting aside at least three months of your living expenses. Use this money to cover for unexpected expenses so you do not have to go into debt whenever there is an emergency. Define what is an “emergency”, too. It is not replacing your sofa or buying shoes when there is a sale. This money is for real emergencies like a broken arm or car repairs.
4. Chomp at your debt.
It is best to tackle one debt at a time. This creates momentum and motivation. Once you have finished paying off the first debt, target the second. Apply the amount of your first payment, plus the extra money from your budget to debt two. Keep going and roll old payments to the next debt on your list until you eliminate all the debt from your list.
5. Focus and refocus.
Dealing with debt can be draining. Sometimes you will slip, but do not let it stop you from achieving your goal! Focus on why you want to get out of debt and think of all the things you can do once you are debt-free. You can always energize and inspire yourself. It is all in your mind!
6. Avoid creating new debt.
Once you cleared your list, commit to yourself and declare that you will stay free of debt. Manage your money better. Plan your expenses and save. You should also focus on building wealth and investing your money. Write a financial plan and implement it so that you never have to be in debt again after your hard-won battle of getting out of debt!