Americans collectively owe over $14 trillion in debt, and the average household has $131,431 in debt. If you’re struggling with debt, you’re not alone. Getting out of debt requires a three-pronged approach of reducing expenses, increasing income, and creating a payment plan. Read on to find out how you can get out of debt.
The first step to getting out of debt is to reduce your expenses. Take a close look at your spending habits and figure out where you can cut back. Do you need that cable TV subscription? Are there any recurring monthly subscriptions that you can do without? Can you switch to a cheaper cell phone plan? Cutting back on your expenses will free up more money that you can put towards paying off your debt.
According to NerdWallet, the average American spends $1,503 per year on impulse purchases. Next time you’re thinking about buying something that you don’t need, ask yourself if it’s worth going into debt for. Impulse buying can quickly derail your efforts to get out of debt, so it’s important to be mindful of your spending habits.
The second step to getting out of debt is to increase your income. One way to do this is by getting a side hustle. With the gig economy, there are plenty of opportunities for making extra money. Just a few popular side gigs include:
You can also sell items that you no longer need, such as clothes, furniture, or electronics.
If you have some extra time on your hands and a bit of creativity, you could even start a small business. There are also many opportunities for making money online through sites like Swagbucks and InboxDollars. Whatever route you decide to go, make sure that the income from your side hustle goes directly towards paying off your debt.
Another way to save money is to negotiate with your creditors. If you’re struggling to make your monthly payments, reach out to your creditors and explain your situation. Many creditors are willing to work with you by either reducing the interest rate on your account or giving you more time to repay your debt.
Debt can feel like an insurmountable burden, but it doesn’t have to be. By following the three steps of reducing expenses, increasing income, and creating a payment plan, you can get out of debt and take control of your finances. It may not be easy, but it’ll be worth it in the end.