If you are like many people, you may carry thousands of dollars of debt. That debt can cost you thousands more in interest every year, which is essentially wasted money. Credit card debt, especially, can be costly to carry as the interest rate is often 12.99% to as high as 29.99% if you have not paid on time before and incurred a penalty fee.
If you have decided now is the time to get rid of the debt, there are several steps you can take:
- Decrease your expenses. Look back on credit card statements and your checking account for the last 3 to 6 months to write down how much you spent and on what. Develop a budget from this and then see if you can cut any expenses. Sometimes cutting might be painful, such as eliminating cable even though you are a sports enthusiast, but other times the cutting is painless such as simply calling your credit card company and asking for a lower interest rate.
- Increase your income. The easiest way to increase your income is to ask for a raise, but that isn’t always possible for every employee. Instead, you could work overtime if it is available, or, if there are jobs in your field, you could also look for another job with higher pay or a greater opportunity for advancement.
- Create additional income streams. Sure you could get a part-time job at a restaurant or a department store, but the hours aren’t that flexible and the jobs often pay minimum wage, which won’t help you kill your debt quickly. Instead, consider creating a side job based on your skills. Are you a teacher? Why not become an online tutor? Do you like to make crafts? Open an online store. You will need to set up a website and find a method to accept credit card payments. (Companies offering merchant account solutions can help you with this.) Instead of making minimum wage, you will be making double or triple that amount because of your expertise. Apply all of the money to your debts.
If you are deeply in debt, it may take a year or more to get out of debt. However, if you can cut your expenses and develop additional income streams that provide you a good source of income, you will get out of debt that much quicker.
Post by Melissa