If you’ve been carrying around credit debt or burdensome student loans for the last few years, it’s time to make a vow to pay it off for good. The new year is here and it’s the perfect time to set some goals that will put you one step closer to financial freedom. Dumping those high-interest payments can free up the extra cash you need to plan for retirement, save for a home or just take a much-needed vacation. If you’re interested in accelerating your debt payoff in 2015, here are six simple tricks that will put you on the right course.
Pick up a Side Hustle
Cutting your expenses down to the bare bones is one way to loosen up some money in your budget that you can allocate to your debt, but it’s not always enough. Sometimes the answer is increasing your income. If you’re not able to take on a second job, though, you’re going to have to get a little creative.
Starting a side hustle, whether it’s mowing lawns on the weekends, selling stuff on eBay or moonlighting as a freelancer can bring in those extra dollars you need to make a bigger dent in what you owe. When you’re researching your side hustle options, be sure to look at whether there are any start-up costs involved and what kind of time commitment is involved so you choose something that fits your schedule and your wallet.
Check Your Credit Card Statement for Grey Charges
If you’re not scouring over your credit card statements each month, you could be adding to your debt without even knowing it. Grey charges show up on your bill monthly, causing your balance to increase right under your nose.
Some of the most common grey charges include things like magazine or newspaper subscriptions, fees for services after a free trial period ends and credit card insurance plans. They may only be a few bucks each, but that’s money you could be using to chip away the debt, so it pays to be on the lookout for these unwanted charges.
Lower Your Interest Rates
When you’re paying 18, 20 or even 25 percent in interest each month, it’s going to take a monumental effort to knock out the debt. Getting your rate reduced can save you money and speed up your schedule for reaching a zero balance. Calling up your credit card company and negotiating a lower rate is one option; transferring your balance to a different lower interest card is another.
Balance transfer promotions aren’t all the same, so you’ll have to read the terms closely before you sign on the dotted line. Ideally, you want to find the one that gives you the longest amount of time without paying interest. It’s important to have a plan in place to make the most of this no-interest time. Be sure to check whether there’s an annual fee, since those can easily eat up any money you’re saving by switching to a lower rate.
Trade Credit Card Rewards for Cash
If you’ve got a rewards credit card that pays you cash back or lets you convert points to cash, you’ve essentially got money in your pocket that you can use to pay down your debt faster. All you have to do is let your rewards build up a little, then you can redeem them and slap the cash down on your balance. Even if it’s only $25 or $30 every few months, that’s a few bucks extra that you could put towards your student loans or another annoying debt.
Switch to Micropayments
There’s nothing wrong with paying your credit card bill once a month, but you could shave a few bucks off the interest by splitting it up into smaller bites. You may even be able to throw a little bit more at the debt by breaking it down. For instance, if you normally pay $100 toward the balance, you could pay $30 a week instead. Unless you’re on a really tight budget, you’re probably not going to miss the extra $5 each week, and over the course of a year you’d bump an extra $260 off the debt.
Go on a Spending Freeze
It’s easy to nickel and dime yourself to death if you’re not careful. You drop $5 on lunch one day or $3 for coffee every morning and by the end of the month, you’ve spent $100 or more that you could’ve applied to your debt. Instituting a spending freeze stops your budget leaks immediately and puts into perspective just how much money you’re throwing away.
If you’ve never done a spending freeze before, you basically commit to not spending anything outside of what you’ve budgeted for your fixed and variable expenses. The idea can be tough to get used to, especially if you’re a spender by nature, but you might be surprised at how much money you’ve got left over at the end of the month to send towards those pesky debts.
Getting rid of credits card balances, car loans or student loan payments shouldn’t take over your life. With a little outside-the-box thinking and a willingness to achieve your goal, you can make 2015 the year you kiss your debts goodbye for good.
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