The holidays have come and gone – and if you’re like most Americans, you have probably accrued some debt. Using your credit card to help you get through the holidays can be useful, but the aftermath is often difficult to handle. According to research from Magnify Money, the average American adds $986 to their personal debt during the holiday season. Some even put thousands on their credit cards. If this is you, you’ll want to pay off that big chunk of change sooner rather than later.
These are 6 strategies for paying down your debt this year, to control your money instead of letting it control you.
- Find a Budget You Can Stick To
Most people have tried some kind of budgeting over the years, but like dieting, it can be hard to find a program that sticks. Don’t give up, though! There are some neat strategies to try beyong the old write-down-everything-you-spend trick. You might use a free app, like Every Dollar or Mint. Or, you might use the envelope system, where you deal primarily in cash that’s separated into envelopes for categories like groceries and fun, and when the envelope is empty the budget is spent.
Overall, don’t give up on budgeting until you find a plan you love. The entire process will make you more mindful of your spending and will help you stick to your goal of paying down debt.
- Travel Cheaply
Travel will likely be an item on your wish list this year, and you don’t have to give up this luxury just to overcome your debt. Simply find cheaper ways to take the vacation (or even skip the airfare and take a staycation!) . Start by using an online travel agent to find the best deals. If you’re planning a trip to San Francisco, for example, you could use filters to identify hotels within your budget and preferences. The same can be done for rental cars, flights, and other travel routes.
Groupons and other discounts can also help you maintain a budget while taking your vacation. If you’re particularly mindful of your spending and use the resources available, you can have an enjoyable trip without adding more debt to your life.
- Use Your Tax Refund
If you are getting money back from your tax return, you might be thinking of making improvements to your house, buying some new clothes or eating at the new fancy restaurant in town? Well if your debt is high this year, you might consider sacrificing a few of these pleasures to help minimize what you owe. It will be a relief to have less debt and since you’ve paid the money out already, you won’t even miss it!
- Pay More on Your Credit Card Balance Each Month
Magnify Money research reveals that the majority of those with credit card debt only make the minimum payments. This means that they pay things off slowly, letting interest payments grow and forcing them to pay as much as double the original balance.
Rather than paying just the minimum each month, shell out a little more. If your payment is $25, try to squeeze out $100 instead. If you get a bonus or fall into some extra cash, use that to pay down your debt.
- Pick Up a Side Job
If your monthly paycheck isn’t cutting it, pick up a side job that can bring in a little extra. You probably have some marketable skills that you can use for freelancing or consulting.
- Those with a talent for writing can pick up blogging gigs.
- If you’re handy at math, tutor college students.
- Try teaching classes online for a local community college.
- Offer consulting services to small businesses.
- Donate blood plasma.
You could bring in an extra thousand dollars or more per month with one or more of these side jobs, which could really help with your debt.
- Hide Your Cards
The most important part of managing your money is preventing further debt. It’s pretty hard to do so if you use your credit cards regularly to make purchases.
If you’re serious about eliminating debt this year, don’t take your cards with you to the store. Keep them in a safe place that’s not easily accessible so they can be used in an emergency, but they won’t fund an unnecessary shopping spree. Preventing further debt is one of the best solutions for eliminating current financial obligations.
Categories: Credit Cards