It is essential to repay your debts to regain financial security. It will reduce your financial stress, and you will be able to save your money for yourself. People worldwide feel intimidated by repaying thousands in debt, but there are many great ways to do this.
To successfully pay off debt and remain motivated, consumers need to define why they’re paying off their debt and track their repayments. Increasing income and decreasing spending is one aspect of this. Many people also consider a second job, side hustle, or refinancing to repay debt faster.
Regardless of how much debt you need to pay back, there are many tried and tested ways of getting to the finish line. We will explain how you can pay off thousands in debt and guide you through the different methods.
How To Pay Off Thousands In Debt
Paying off debts is essential to reclaiming your financial security. In the long run, this will reduce financial stress and allow you to spend your hard-earned money on what matters to you. For many people, the thought of paying off thousands in debt is rather daunting. However, it doesn’t have to be!
After all, paying off your debts is all about celebrating the small victories along the way! For instance, many people use a debt snowball method, where the smallest loan is paid first, followed by the next-smallest. Other people prefer to use an end date to create a timeline for paying off their debts.
Many methods can be used to pay back thousands in debt effectively. From increasing your income to consolidating debt, numerous ways can be used to speed up the repayment process. However, before we look at these methods in more detail, it’s crucial to define why you’re paying off your debt.
Define Your “Why”
Before we outline various methods that can be used to pay off debt, it’s important to define why you’re paying off your debt. After all, one of the best ways to stay motivated while paying off debt is by focusing on the reason you want to become debt-free.
For instance, if you eventually want to purchase your first house, paying off your existing debts is an important step. You can use your dream house to motivate you to pay off your debts faster. This same logic applies to many other reasons.
If you’re planning your retirement, paying off your debts faster will allow you to make larger contributions to your 401(k) or retirement fund. Paying off debt will also allow you to improve your credit score in the long run. Once you’ve repaid your balance, you’ll be able to spend your money on what really matters to you – but how do you get there?
Increase Your Income
Increasing your income is a great way to pay off debts faster. However, increasing your income doesn’t always mean earning more money. For instance, your disposable income can be increased by – even temporarily – decreasing your expenses. Expense tracking software can assist consumers with this.
You should also consider any benefits provided to you by your employer. By making full use of your benefits, you may be able to save money in certain areas. Of course, extra or overtime hours at work can also assist in increasing your income. It may even be time to ask your boss for a salary increase.
A second job can also assist you in paying off your debts. With a second job, you’d need to ensure the hours are compatible with your current job and routine. Today, you may not need a second job – just a good side hustle!
Refinance Your Student Loans Or Mortgage
It would help if you considered refinancing or debt consolidation when paying off debts. Refinancing allows the terms and conditions of an existing credit agreement to be revised, enabling consumers to make favorable changes to their agreement and interest rates.
By consolidating different debts, consumers can also reduce the number of overall bills. Ultimately, refinancing and debt consolidation options will vary depending on your bank and credit lender. However, it’s definitely worth looking into these options with your bank!
Start A Side Hustle
There are plenty of exciting ways to boost your income. With a side hustle, you can truly let your creativity shine. Some people might decide to sell their creations on platforms like Etsy.
When starting a side hustle, you should consider your existing hobbies. Photographers may wish to sell framed prints on the side, while someone with a pick-up van can make extra cash by helping people move furniture. Finding a side hustle that works for you can repay debt faster.
Here are ten side hustles people use to make extra money:
- Sell services on Upwork or Fiverr
- Sell products/creations on e-commerce sites or social media
- Online tutoring
- Drive for an e-hailing business
- Place their cars on peer-to-peer renting sites
- Do local deliveries
- Walk some dogs or offer pet sitting services
- Babysit or housesit
- Rent out a room on Airbnb
- Online assistant
Track Your Debt Payments
Tracking your debt payment is a crucial aspect to consider. After all, how you track your repayment will allow you to see the results of your efforts! Tracking your repayments is a great way to remain motivated as you pay off your debts. If you can repay that amount, you can also save that amount.
There are numerous ways you can track your payments. You may decide to use a smartphone app or a simple excel sheet. Some people choose to make a progress bar poster that can be updated as you make repayments. Regardless of how you do this, tracking your repayments will keep you on the right track!
To remain motivated, consumers must envision a life without debt and set a goal to work towards while tracking their payments. Decreasing spending and increasing income are two ways of repaying debt faster. Many people also consider a second job or side hustle to make repayments. Of course, refinancing and debt consolidation can also be considered!