Debt can be frustrating and down-heartening. At one time or the other, people find themselves weighed down with debts. Probably, you could be having one that you’re trying to get rid of now. If so, then this is the right page for you to get the solution. What can you do to pay off any debt? Happily, there’s a way out. With over 25 years of teaching and helping people do away with debts, Dave Ramsey set out strategies that you can also use. Let’s discuss some of his basic strategies for debt slashing.
Use the Debt Snowball Method
Dave calls it Baby Step 2 of the debt payment. The method is a debt reduction method that involves paying off your bills in order of their value, smallest to largest, irrespective of the interest rate. It’s also designed to help people change how they handle money to never get into debt again. The snowball method’s beauty is that it gives one the power over debt; you become the boss over it and not vice versa.
When working with the snowball method, the first thing to do is listing down all your debts from smallest to largest. Next, you’ll pay minimum amounts to all debts except the smallest; for it, pay as much money as you can. Once you pay it off, apply its amount to the next smallest debt while making minimum payments on others
Finally, repeat the procedure to slash your debt through. Like a snowball rolling downhill, you’ll have much of your money freed the more you payoff the debt.
Reduce Your Expenditure
Spending much while trying to get rid of debt isn’t possible. Now is the time to cut all unnecessary expenses or those you can do without at least for some time as you deal with the debt burden. Deal with each expenditure as it was a stumbling block to achieving your objective. The secret here is to have a proper budget. List down needs according to a scale of preference. Some practical things that you can do to live frugally include:
- Watching shows online and cancelling the cable subscription. Use that cable bill to aid in debt payment. Do so for any other subscriptions with possible alternatives.
- Start eating at home and stop going to restaurants. It might be tough to cease eat-outs and those special dinners at your favorite food points, but those can resume later. Cooking at home and inviting your friends over is also a fantastic way to spend time together. Try it out!
- Purchase items in bulk. While going shopping, make a list and aim to buy things in large quantities to avoid constant spending. That helps manage money and dedicate much to the debt. Try to stick to your list and evade impulse buying.
- Ditch expensive hobbies. Do you love costly sports like golf and spend heavily on them? Why not stop them in the meantime? Watch sports from home and save the entry ticket money. It won’t be long before you’re back to normal. If you’ve subscribed to a gym membership, consider pulling out and utilizing other free workout methods.
Making these kinds of sacrifices may seem challenging but have proven to be the best way of paying off debts faster. If they can make you debt-free, why not try them? Hopefully, you will.
Stop Using Credit Cards
You should also cut up any credit cards; debt can’t be fully repaid while accruing others. Instead, try paying for things using cash or other transaction means. In case you need more help on this, feel free to check loan advisor helpful tips.
Take Advantage of Free Things
Now more than ever, you need those free authentic rides (“with no strings attached”) to and from work, the promotions on goods, and others. It won’t mean you’re cheap; it’s an ideal way to settle the issue. Why not buy secondhand things if there aren’t any free ones available? Find free entertainment and pause going for concerts, cinemas, bowling, or any money-requiring entertainment. You could hike, go camping with friends, or even attend a free show if any.
Sell Your Belongings
Oops! I don’t mean you get rid of everything in the house or compound, including the useful ones. Of course, you can’t and don’t want to do that! But what about the stuff that hasn’t been used or won’t be at all? It could be an old car or bike in the garage. Or maybe, something that has a compliment; the small cupboard next to the larger one, radio close to the stereo system, and such-like items. Check around your house and make a wise decision about that.
Embrace Creativity and Other Money-making Ways
Who said you couldn’t create other ways to survive the debt payment and manage it efficiently? Everyone can do that. As Dave mentions, there are several ways of doing so. Start a side hustle. Do what you love to get more money. Are you into photography, artwork, music composing, or any hobby/activity that can earn? Go for whatever will work best for you. Find a part-time job that you can do when off regular job duties. Yes, you’ll have to sacrifice a lot, but it’ll be worth it. You can also ask for a pay raise from the employer. Most people shy off from doing that, but it’s best to try.
Stop Any Investment You’re Undertaking
Investing is an excellent way to acquire more money. However, when striving to clear a debt, it might not be the right course to take. It can be hard killing two birds with one stone. So, focus on paying off all the debt to avoid incurring more interests and then embark on the investment later. Appreciate any source of income if that already exists and use them to combat the debt altogether.
The Bottom Line
Paying off all your debts is like taking off a heavy load from your back. Never let any debt be master over you. Use some of the Dave Ramsey strategies discussed above and slash all debt. You’ll become debt-free with little effort. Remember, though, that you decide what to do and how to do it when it comes to managing your debt!