Most of us have some form of debt at one point or another, whether it's a mortgage, car, student loans, or credit cards. In fact, the average American household is over $70,000 in debt, with an average of just over $7,000 in unsecured debts.
Unsecured debts, which include credit card debt and personal loans, also tend to have the highest interest rates and cost the most over time. With that in mind, if you’re carrying around more than your fair share of credit card debt, it makes sense to start paying it down. While having credit is helpful, carrying a balance of maxed out cards means more money spent on interest and lowered credit scores.
Here are five surprisingly fast ways to quickly bring your debt balance down:
- Make a plan.
It may not have originated with paying off credit cards, but the familiar saying, “If you fail to plan, you plan to fail” applies perfectly to debt reduction. Blindly paying on all of your balances works, but you’ll pay off your debt faster with a carefully thought-out, well-executed plan. Start by deciding which debts you’re going to pay off first. Some people pay off the smallest balances first, while others pay off the highest interest balances first. Either way, it’s up to you.
If you’re really serious about paying off your debt, look for areas in your life where you can downsize. For example, if you have two cars in your house, do an experiment and see if you can get by with just one by taking public transportation and carpooling. The money you save on car payments, gas, and insurance is likely to be several hundred a month, which can quickly whittle your debt down. If you live alone, consider getting a roommate to split expenses. While downsizing certain parts of your life takes some effort at first, it’s a very effective way to quickly save you a substantial amount of money that could be put towards your debt.
- Start selling things.
Take a look around your house. Chances are good there are quite a few things you don’t really use or need anymore. Even if you think these things are worthless, start posting them on craigslist or your local classifieds; after all, one man’s trash is another man’s treasure. You can also have a garage sale for smaller items or sell clothing you don’t wear anymore to a consignment shop. These little amounts start to add up quickly.
- Put windfalls towards debt.
Every now and again, most of us are pleasantly surprised with little windfalls like tax returns, gifts, overtime earnings, or bonuses. Instead of using this money to treat yourself to a vacation or new wardrobe, put it towards paying off your debt. You may even find that just one of these windfalls completely knocks out a credit card balance, bringing you that much closer to being debt-free.
- Take on another job.
It’s no secret the economy isn’t in the best shape, and jobs aren’t always easy to come by. However, if your paychecks are covering your living expenses with little to nothing left over to put towards your debt, you may want to consider getting another job. A part-time job on the weekends or a few nights a week could easily bring in a few extra hundred dollars a month to go towards paying off debt. Even a few months of this could put a big dent in your overall amount owed.
If you want to pay off debt quickly, these are a few sure-fire ways to do it. They take discipline and a little sacrifice, but the freedom that comes from not having crippling amounts of credit card debt are well worth it.