For instance, if you paint in your spare time, put some of your pieces up for sale online. If you like to write, monetize your blog or find a client willing to pay for your writing. If you’re working a low number of hours, talk to your boss about how you can work longer shifts or get more hours each week. [3] X Research source
Visit these agencies’ web pages to begin the application process and get in touch with your local community aid department for more information.
If you prefer to develop a budget from scratch, grab a piece of paper and a pen. Draw up three columns. Label the first “Obligatory expenses,” the second “Discretionary spending,” and the third “Income and assets. ” In the first column, make a list of all your debts and household expenses (groceries, minimum monthly payments toward debts, utility bills, and so on). In the second column, list all your discretionary spending (coffee, dining out, entertainment). In the third column, list all the money you earn from working and all the money you’ve put in the bank since landing your job. Total each column at the bottom. Add the totals from columns one and two. Subtract the sum from your total in column three. If the number is equal to or less than zero, eliminate your discretionary spending, reduce the costs accumulated by your obligatory spending, and/or find a better-paying job.
For instance, if you have a debt with 3% interest and a debt with 0. 5% interest, you should pay the minimum monthly balance on the debt with 0. 5% interest, and pay more than the minimum balance each month on the debt with the 3% interest rate. Put the money you saved by reducing your spending after drawing up your budget toward the higher-interest loan. [9] X Research source One exception to this rule is for any debt with a prepayment penalty. Many home mortgages, for instance, have a prepayment penalty for paying the debt off before a certain period of time has elapsed. Check the terms and conditions of each of your debts carefully to avoid being hit with prepayment penalties. Carefully look over all your loan and/or credit documents to determine how to best prioritize your debts.
If you’re really committed to paying off debt, cut back on both discretionary and obligatory spending. No matter how you decide to save money, use the money you’ve saved to pay off debt. Save on housing costs by moving in with friends or family. [11] X Research source If you don’t have any money, one way to save a good deal (and avoid ending up on the street) is to move in with your family or friends. This will give you time to save your money and pay off debt. [12] X Research source
Make time for family and friends. Engaging in pleasant social interactions can improve the mood and overall well-being. Give yourself modest rewards when you reach certain milestones. For instance, if you have $15,000 in debt, cook a pleasant dinner at home with your spouse when you pay off $5,000 of debt. Take a long walk near your favorite river when you’ve paid off $10,000 of debt. When your debt is finally paid off entirely, visit your local museum on a day when there is no charge for admission. [14] X Research source
A financial planner can also help you develop a financial plan to help you acquire wealth, set and meet your financial goals, and discover ways to adapt through changing circumstances such as a change in employment status or divorce. [17] X Research source Rates to consult a financial planner vary. You might get a flat rate for around $1,000, or an hourly fee of about $250 per hour. Though it seems expensive, putting aside some money for a financial planner to analyze your financial situation is a good investment. A financial planner is similar to, but different from, a credit counselor. A credit counselor specializes in helping clients grapple with their consumer debt, while a financial planner tends to help clients develop new skills and tricks to manage their finances (including debts).
Before switching to a balance transfer, be sure you can afford it. If you don’t pay the debt off before the zero percent interest period expires, you’ll be hit with interest again, possibly at an even higher rate than what you were paying originally. Some cards offer a zero-interest rate that lasts up to 18 months. [20] X Research source Balance transfers are typically subject to a one-time fee, so check the fine print before accepting any balance transfer deal from your credit card provider. Keep in mind that balance transfers don’t actually change the amount of debt you owe—they just potentially change your interest rate. [21] X Expert Source Lyle Solomon, JDAttorney Expert Interview. 18 August 2021.
If you decide you need to buy something online, enter your card info where appropriate but do not save it to your profile when prompted to do so. If you’re regularly paying for services or goods online, use a debit card linked to your checking account. This will save you from interest and late fees. Just make sure you always have enough money in your account to make the regular payments.
There is no uniform process for applying for a lower interest rate. Consult the terms and conditions of your specific loans or debts for information about how to negotiate a lower interest rate.
In a debt management plan, you’ll meet with a credit counselor to determine how much you can afford to pay each month. This is the most common sort of debt consolidation. With debt consolidation loans, you make a single payment to a single creditor at a lower interest rate than what you’ve been paying. This means you will be able to focus on paying off one debt at a time. A third variation on debt consolidation is known as debt settlement. With this technique, you can pay a massive lump sum toward your debt that totals far less than what you would otherwise pay. Debt consolidation and debt settlement will negatively impact your credit score. Debt consolidations will likely push back the period it takes you to pay off your debt. Talk to a credit counselor or certified financial planner to begin a debt settlement or debt consolidation program.
