As of September 2022, American consumer debt is at a mind-boggling $16.5 trillion. In other words, if you’re struggling with heavy debt, you are certainly not alone. Most Americans have debt and have to spend monthly money to keep it from worsening.
Everyone wants an easy way to get out of debt. Unfortunately, unless you win the lottery or are left a fortune by a deceased relative, there are no immediate solutions. However, that does not mean you need to be stuck with debt forever. There are ways to start decreasing your debt right now, working towards a future that is debt-free.
Here are 5 hacks to get rid of debt once and for all.
1. Debt Consolidation
Debt consolidation is an underused and underrated way of handling your debt. This refers to the process of consolidating your debt into one loan. Instead of paying off credit cards, personal loans, and payday loans to different companies at different interest rates, you pay off one loan with a single interest rate.
What you are essentially doing is taking out a loan to pay off all of your debt. However, it is somewhat more complicated than going to any old loan provider. After all, you need to know that you are spending less on your debt by going down this route. Debt consolidation loans are specifically crafted for this purpose.
If you can get a debt consolidation loan, you should go for it. Your credit score and history, along with the size of your debt, will impact your ability to get a good debt consolidation loan. Look into the options to see what you qualify for.
2. Use Your Savings To Pay Off High-Interest Debt
Having savings is incredibly important. It is a safety blanket you cannot afford to lose. But if you are paying off high-interest loans, you are spending far more money on interest than you are making from your savings. As such, it may be a good move to pay off some of your debt with the highest interest rates using your savings.
There is a balance to be found. You should still retain some savings for a rainy day. In a crisis, being able to pay your way out of trouble may be more important than missing a debt payment. While the smart move on the basis of a number is to use all your savings to pay off your debt, you should rather keep a significant balance.
3. Negotiate Lower Interest Rates
Once you have agreed to a loan or credit card with a certain interest rate, you may assume that there is no way out of that figure. However, the reality is that, if you have been consistent at making monthly payments, many creditors will be willing to negotiate a lower interest rate.
Get in touch with your various creditors and ask. The worst thing they can say is no.
4. Sell Stuff
This will not be at the top of your list. You may treasure all of your possessions, whether or not you actually use them. But if you have a storeroom full of valuable stuff you don’t use, consider selling it and using the money to pay off debt. These items may include hobbies that you hope to one day pick up again. The reality is that if you ever do decide to start playing drums, sewing, gaming, or anything else, you can buy what you need when the time is right.
5. Get A Side Hustle
If you don’t already have a second or third job, now may be the time to get one. It is easier than ever to start a side hustle, especially if you have particular skills that you use at your current job. Edit videos for your employer? You can get high-paying gigs online. Design logos and web content? There are tons of companies looking for freelancers.
In 2022, if you are not using your skills for at least one side hustle, you are missing out on many opportunities. You may not want to be working more than one job for the rest of your life, but give it a try while paying off what remains of your debt.
There are no get-out-of-debt-quick schemes that work. However, using the above 5 hacks, you can start getting a handle on your debt.