Debt is a tricky subject. On one hand, debt may seem like it’s a good thing. Debt is how governments across the world pay for a lot of their activities these days, and how many American’s pay for college, and purchase cars and homes. On the other hand, debt has ruined people’s lives and well being, usually for getting into too much of it. For some people, excessive debt is the unfortunate circumstance of high medical bills, and for others, it’s the result of spending too much with credit cards or getting too big of a mortgage for their income.
In my early twenties, I racked up a few thousand dollars in credit card debt, which is meager compared to some. Nevertheless, it was difficult to pay down with my Starbucks Supervisor job, while living in LA with a girlfriend, and the pressures of maintaining a social life. Even with making minimum payments, my balance would still grow month over month due to the high-interest rates, and that stressed me out tremendously. Although I still currently have student loans (due to the low interest rate and balance, I feel my extra money is better off invested) I paid off all my credit cards using the tips below, and I have felt a positive change in my life since.
Regardless of how the debt was accrued (credit card, mortgage, auto, student loans, personal loans, etc.), the tips below will help you free up some cash to pay it down faster, and get your financial life back on track!
Tips to free up some extra cash and use it to pay off debt:
- Evaluate your day-to-day expenses to see where you can cut. Use any freed up cash to pay off debt.
- Create and live on a bare-bones budget to free up extra cash.
- Use a bonus, tax refund, or any other windfall to pay down debt.
- Get a second job (side hustle). Use all of the income from this hustle to pay down debt.
- If possible, negotiate, consolidate, or refinance debt to a lower interest rate.
- Sell unnecessary or unwanted items and use the proceeds to pay down debt.
- Ask for a raise or promotion or get a new job with higher pay. Use all of the extra income to pay off debt.
- Stop going out to bars and restaurants. Bring lunch to work every day. This will save more money than you think. Use all of it for debt pay down.
While most of these tips require some short term discomfort, the feeling of not worrying about burdensome debt far exceeded any discomfort I felt. Obliviously some of these tips will not work for everyone. Additionally, some people carrying debt can manage it and are not bothered with it, which is how I currently feel with my remaining student loan debt. The credit card debt I was in was another story. It stressed me out to the point where I would grind my teeth while sleeping. I would get easily annoyed with petty things in life, and had an overall sense that I was falling behind. Not any more thanks to these tips!