It can feel like you’re against the world when you’re trying to get out of debt. This is especially true when you’re doing it on your own. But there are several things you can do that might just help you beat debt on your own.
Change Your Budgeting Habits
Budgeting is one of the first things you should do when you’re battling debt. Creating a budget lets you see exactly where your money is going, and places where you might be able to save more.
In order to get out of debt, you need to find a way to pay down more of what you owe every month. It’s a good idea to dedicate windfall income, such as a raise, bonus, or gift, directly to paying your debt. But if you have a lot of debt, you’re not going to be able to wait around forever for these things.
Tighten up your budget so you can put a little bit more each month toward paying down debt, while also building a modest emergency fund. Having some rainy-day money set aside can help you avoid having to take on more debt if you need to incur unexpected expenses.
Implement a Debt Repayment Strategy
You’ll have a harder time getting out of debt on your own if you just throw money at debts without any kind of logical approach. There are two main debt repayment strategies evangelized by financial gurus and get-out-of-debt success stories: the snowball and the avalanche.
The snowball method has you pay off your debts with the lowest balance first while paying just the minimum due on the rest. Once you knock out the smallest debt, you focus on the next-smallest. Getting quick wins with those smaller debts has proven effective because it gives a psychological boost to keep going.
The avalanche encourages you to tackle the highest interest rate debts first, as doing this will save you money on interest payments. Although this is a more logical approach from a cost perspective, the snowball is typically recommended due to its better success rate. Whether you choose to follow one of these strategies or another, it’s important that you have a repayment plan.
Generate More Cash Flow
Finding ways to make more money is one of the best ways to get out of debt on your own. This can come in the form of getting a raise or new position at work. You can also try to sell some of your unused items. Doing this can get you some extra money to instantly pay down your debt. A third option is to take on a side job if you have some time to spare.
Where You Can Seek Help for Your Debt
Not everyone is going to be able to get out of debt without any outside help. If you’re really struggling to find a path to better financial footing, it’s a good idea to contact professionals.
It’s smart to start out by contacting a credit counseling organization. Working with a credit counselor can help you gain a better understanding of your debt, and potential routes for paying it off. Your counselor may be able to get you on a Debt Management Plan (DMP) in which you make a single payment to the counseling agency each month and they disperse it to creditors, possibly at a lower interest rate.
While there are certainly advantages to credit counseling, this path won’t work for everyone. Credit counseling won’t lower the principal amount of debt you owe. For people who need a more comprehensive solution for major unsecured debt, a debt relief program like Freedom Debt Relief may be a better fit, as it can potentially reduce the amount you owe to creditors through negotiations.
Sometimes debt simply gets out of your control. This is totally understandable when you’re trying to pay off multiple balances at a time—especially when they come with a high interest rate. Working with a debt relief agency can give you the structure you need to pay down those loans.
Employing a strategy of debt settlement can actually help lower the amount owed to creditors. Working with a debt relief agency gives you the advantage of having experts on your side. Just make sure the organization you choose has a good reputation with consumers, as not all debt relief companies are the same.
While there’s no one-size-fits-all strategy for paying off debt, there are many possible approaches that can work based on your needs and situation. It’s within your power to get out of debt on your own. But if this doesn’t work, there are further options available to you.