These agencies can also work directly with your lenders to potentially help you save money on interest and fees. For example, if you could earn an extra $500 per month, in 12 months, you’d be able to pay off an additional $6,000 of debt. Think about devoting some spare time each week to earn extra income. Let’s say, for example, that you have $20,000 in credit card debt with an APR of 20%.
This is the one number that takes into account everything, including your current debts, their interest rates, your payoff strategy and your income. If you’ve got multiple debts, it’s time to make a plan to tackle them. The extra income can be dedicated entirely to debt repayment, helping you make more substantial strides towards your financial goals. Like we’ve highlighted, it’s important to stick to your budget, make your payments on time, and avoid accumulating new debt. One common strategy is the “debt snowball” method, where you focus on paying off the smallest debts first. Short-term goals could include paying off a specific credit card or reducing your overall debt by a certain percentage within the next six months.
How to Pay Off Credit Card Debt
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When You Still Need Help Paying Off Debt
You can either prioritize by smallest balance (debt snowball) or highest interest rate (debt avalanche). If you know you’re going to want coffee a few times a week, budget for it instead of pretending you won’t spend it. Start by listing your income, then subtract all your fixed expenses, like rent, groceries, and utilities. A budget is simply a plan for your money, and the key word here is “realistic.”
Reduce Your Monthly Fixed Costs
- The two go hand in hand, forming the bedrock of a secure financial future.
- Trust me, you’re not alone in feeling overwhelmed by finances—it’s something many of us are dealing with.
- Aside from making regular payments equaling more than the sum of your monthly minimum payments, the best way to get out of debt is to not take on any more.
- A reputable firm can negotiate with your creditors on your behalf to settle debts for less than what is owed.
- Truth is, if generating extra revenue was that easy, businesses wouldn’t get into debt in the first place.
Becoming debt-free isn’t a sprint, it’s a marathon—and you’ve already got the tools to cross that finish line! Once a month, I sit down with my budget, expenses, and goals to see how things are going. I didn’t realize how helpful monthly financial check-ins would be until I started doing them. Setting aside $500–$1,000 as an emergency fund helped me avoid taking on new debt when unexpected expenses popped up. Start with one, pay as much as you can toward it while making minimum payments on the others, and then move on to the next.
A business mentor from your local Small Business Development Center (SBDC), SCORE, Women’s Business Center, or Veterans Business Outreach Center. Research has found that people under financial stress may be more prone to make less-than-optimal decisions. Also double check whether you’ve provided a personal guarantee on the account. In a few cases, a default could give them the right to seize business assets, including funds in your business bank accounts. Others may be able to give you a discount if you pay quickly, saving you anywhere from 2% to 10%.
One effective way to track spending is by keeping a record of all expenses for a month. This helps individuals to identify areas where they are overspending and cut back on unnecessary expenses. It helps individuals to track their spending habits and prioritize their expenses.
Liquidate Assets
The decluttering process is the easiest way to kick start your journey to minimalism. Once I remembered the purpose of minimalism and why I was implementing it, I had such an easier time letting that thing go. When you understand what you want minimalism to do for you, it’s so much easier to declutter.
Don’t Set a New Year’s Resolution. There’s a Better Way to Achieve Your Goals in 2026.
Like we’ve mentioned, one thing that you can do to potentially help expedite your debt repayment journey is to consider looking for extra income streams. This fund will act as a financial safety net, allowing you to cover unforeseen expenses without resorting to accumulating more debt. Aim to save three to six months’ worth of living expenses in a separate savings account. Unexpected expenses can derail even the most well-structured debt elimination plan.
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- Sales are the standby method most business owners turn to when they need to increase small business revenue.
- Most people who try this find that it doesn’t work unless it is part of a larger debt payoff strategy.
- Obviously, the first option in trying to save a business while managing its debt is taking money out of your own pocket and putting it into your business.
- Like many other Americans, you may be focusing on saving more money and becoming debt free.
- Contrary to common belief, not all debt is bad.
How to Pay Off Debt With the Debt Snowball
But figuring out where to start and how to keep going can be challenging. Many people have successfully paid off debt using the method below. It often comes with a great deal of shame and hopelessness as you struggle to see how you’ll ever get back on track with your finances.
If you’re feeling overwhelmed by debt and do not want to declare bankruptcy, consumer credit counseling services can help you get back on the right track. But whether you pick up extra hours at work, take a part-time job or start a lucrative side hustle, there are many options to make extra money. Earning extra income, naturally, can help you pay off your debt faster. You may be able to get a cash-out refinance and pay off your credit card debt. To get a consolidation loan, you’ll generally need fair credit or better.
This, of course, depends on your career situation, your skill set and how much free time you have outside of work. Remember, though, that your home is the collateral for this loan. Some balance transfer credit cards offer 0% APR on the balance transfer amount for an introductory period of a certain number of months. If you have a good credit score and carry one or more credit card balances with high APRs, you may want to consider applying for a balance transfer credit card. How much progress can you make in reducing your debt within the next year?
It’s the best (and fastest) way to pay off your debt—especially if you’re juggling multiple debts. Debt consolidation is where you take out one large, preferably low-interest loan to pay off several smaller business loans. Explain your financial situation and ask your lender if they can be flexible with late fees, restructuring payments, and even renegotiating your interest rate. Loopholes like these usually only apply to instalment loans and payments to vendors. The best strategy to pay down business debt will depend on how much you owe, your current cash flow and, in many ways, your willpower. But in some cases, what feels like overwhelming debt is just disorganized income, or income you haven’t optimized towards paying off debt.
Reminders can be as simple as one person calculating the debt payoff date each week, then texting the date to their spouse. Participants were advised to tell at least one friend about their debt payoff goal. Most people have no how to eliminate small business debt in 7 simple steps idea how much debt they have, let alone the exact month they’re going to pay it off. So there’s a high cost to building an emergency fund while you’re burdened with high-interest debt. Ultimately, what matters most is not which approach you choose; it’s that you pick one, commit to it, and stick with it until your debt-free day.
With this information, you’ll be able to figure out how to budget, which to pay down first, and whether it may make sense to consolidate or refinance. If you have a couple of different credit accounts, you also have to juggle different interest rates and due dates for each bill. Ever feel like you’re buried under an ever-increasing mountain of debt? Download it now from the Google Play store or App Store to get started on your path to financial freedom. The Life Planner app can help you track your goals, automate your savings, and stay on top of your financial progress. Financial freedom is within reach, and with these 7 simple steps, you can start your journey today.
Celebrate small victories along the way, like paying off a credit card or reaching a specific milestone in your repayment journey. Creating a debt elimination plan is only the first step; the key to success lies in maintaining discipline and consistency throughout the repayment process. The more you can allocate to debt repayment, the faster you’ll progress towards your financial goals.