Although I hate to admit it, my husband and I haven’t always been the best money managers in the past. Having tight finances left us stressed and tired from sleepless nights of worrying. Luckily our finances have gotten better in the past few years.
Still, we aren’t the only people who’ve experienced money troubles. Lots of other Americans are facing budget problems as well as severe debt at this very moment. If you’re among them, there are some actions you can take now to get out of debt.
1. Consolidate debt
If you have several different loans, and credit card debt, consolidating everything could help you get out of debt. Consolidating lumps all your debt together so you can make one larger payment instead of a bunch of smaller ones.
Combining your debt could make what you pay each month a little bit less overall. A consolidation loan might also provide you with lower interest or better terms.
Of course, there are potential drawbacks to consolidating debt. For instance, you might end up paying more total interest in the end. When your payments are significantly lower, but for a longer period of time, you’ll probably pay more.
You must also understand that the debt is still there for you to pay. Sure, you might feel some relief in having lower payments. But, you still have to pay the debt at some point.
2. Change Your Spending Habits
To really get out of debt and make consolidation worth the effort you need to change your spending habits. Rather than buying everything you want you’ll need to buy what you truly need.
You should also create a budget before your debt takes over again. Put away or destroy credit cards and don’t use them.
Challenge yourself to a no spend month. Do whatever it takes to help you curb spending and throw as much money at your debt as possible. Change your old habits so you don’t end up right back where you started in a few short months.
3. Sell Extra Stuff
Do you own tons of books, CD’s, DVD’s, clothes, and other items? Gather these items and hold a garage sale or sell your stuff online. Use the extra money you make to pay down your debt.
Go through closets, garages, basements, and other areas of your home. Do a little online research to find the best places to sell each category of items. That will help you make the most money to apply to what you owe.
You’d be surprised how much money you can get just from selling your old excess clutter. Nevertheless, it might not seem like much compared to what you owe. But each cent used to pay off debt gains you debt progress as well as reduced interest on your loans.
4. Take Drastic Action
At times, no amount of debt consolidation, bill negotiation, or other actions will be enough. If what you owe is too great, you may have to take drastic action to get out of debt.
Sell Your Home
Difficult as it may be, selling your home to either buy a smaller one or rent could help. Or, it might require you to move to a different neighborhood or city altogether to lower your mortgage.
While that’s a big decision to make (and it should not be made lightly, by the way, but only after careful consideration) it could rid you of debt and ease your budget.
Rent Your Home or Extra Rooms
Another idea you could take is to rent out your home temporarily and move to a smaller home. Use the money you receive to pay your own rent payment as well as some of your debt.
Even though this idea may not be what you envisioned when you bought your home it could provide financial relief. It’s also a bit less drastic than selling your home outright.
Obviously, you could also try renting extra rooms in your home to add to your income. Keep in mind this may or may not provide a steady, dependable income. However, it could be enough to help you get out of debt faster.
Refinance Your Mortgage
Maybe you won’t have to take such drastic action as selling your home. Perhaps you could simply refinance your mortgage to get your payments lowered instead.
Talk to your banker or look at other options to see if you can reduce what you pay. It could be just what you need to help you get out of debt.
5. Get a side hustle
Taking on a side hustle is another action you can take. If you don’t want to work at a second job permanently, there are plenty of things you can do temporarily.
For example you could wash cars, paint houses, dog sit/dog walk, house sit, babysit, bake, or many other things. There are nearly infinite ways to make extra money, depending on your knowledge and skills.
When you’re in debt you don’t have to stay that way. There are plenty of actions you can take now to get out of debt. You have the power to take back control of your finances today.
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Are you in debt? If so, what are you doing now to get out of debt?