HNE Staff It’s easy for debts to pile up if you don’t manage your finances properly, but it’s not as easy to bulldoze off your life. If you keep pretending it’s not there, one day it will catch up with you, with interest and all. But there are practical tips you can follow to pay off debt and enjoy a debt-free life.
Also, do you know how much money you’re wasting every day by doing things you don’t realize are financially draining? Learn the shocking ways you’re wasting money. Pay attention to it to avoid losing money.
Here are 10 tricks to live a debt-free life that you can follow if you’re unemployed:
1. Choose the Most Suitable Debt Payment Method
Pick between the debt snowball method and paying off debts with the highest rate first.
The snowball method starts with you setting aside money as your emergency fund. Then, list all your debts down, from the smallest to the biggest. Whatever money you’ll earn should be used to pay off the smallest debt first while ensuring minimum payments for the other debts. After paying off the smallest debt, deal with the next one. Repeat said steps until you’ve paid off all your debts.
The second option is to pay off your most expensive debts first. Pick that debt with the most interest and spend all your extra money on paying it off. Make minimum payments on the rest. Do the same thing for the other debts, arranging from the most expensive to the least costly ones.
2. Pay More Than the Minimum
Pay off more than the minimum amount due every month if you don’t want to prolong your debt. Otherwise, you’ll only be paying the bulk of your minimum payments to your interest fees instead of the principal.
3. Cut Some Things Off Your Regular Spending
Here are some tricks to cut off spending, such as the following:
- Start cutting out and collecting coupons for the products you actually use.
- Cut off the cable if you can watch TV shows and movies online.
- Cook more, dine out less, even if the latter is more convenient to do. You can invite friends over and cook instead of eating at a restaurant.
- Brew your coffee at home instead of frequenting your favorite coffee shop on the way to work.
- Start a meal plan to help you cope with cooking at home more. The money you save can help pay off your debt.
4. Save on Groceries
When you shop, carry a list of things you need and make a budget. Stick to it by keeping track of the prices you put in your cart. Don’t forget to eat before shopping to avoid impulse buying. If you find non-perishable goods on sale, stockpile them so you can skip them in your next grocery run. Make sure to freeze food properly as well to avoid wasting them.
5. Find More Affordable Entertainment and Hobbies
Let go of costly hobbies and memberships. Even if you love golf or crafty projects, but they will cost you hundreds of dollars, try to find a cheaper form of entertainment. You might want to reconsider your gym membership if you can work out at home or the local park. Entertain yourself without spending too much. Instead of going to the movies, enjoying golf, or visiting theme parks, you can play at the local park with the kids, look for free concerts, or join free community events.
6. Augment Your Income
Cutting off on your expenses might not be enough to help you speed up the debt payment. You can get a second job, but be prepared for its physical demand. You’ll have to spend a few more hours on another job after logging out of your main one. Some have tried bartending, tutoring, babysitting, food delivery, cab driving, and more.
If there is an opportunity for a promotion, work hard for it. But if you think you’ll get stuck in your current position, look for a higher-paying job.
Another option to boost your earnings is to sell some of the stuff you don’t use. Put them up online or a yard sale, but understand that this is not a sustainable way to earn money. Soon enough, you’ll run out of things to sell.
7. Negotiate for Lower Interest Rates
Talk to the credit card issuer about reducing your interest rates. You might get favorable feedback if you have a good record as an on-time bill payer. But if it’s a negative response, you might want to think of a balance transfer. Some card issuers might offer you a 0% introduction APR for as long as 18 months. You might incur a balance transfer fee, but it might also save you money for paying a lower interest rate.
8. Consolidate Your Loans
Look for a bank that offers loan consolidation for a lower interest rate. It will prevent you from incurring more debt as you pay off existing ones and save you some money as well.
You need to pay off debt and set some money aside for your monthly expenses. Otherwise, you’ll end up swiping your credit cards some more. If you combine this with cutting off on spending and finding ways to earn extra, you are getting near to your goal which is a debt-free life.
9. Be a Conscious Spender
Once you’ve cleared your debts, work hard and keep debt-free life. First, make a sustainable budget. Learn to track your income and spending, so you’ll know where your money is going. Some would suggest a 50/30/20 method. It provides 50% for your needs, 30% for wants, and 20% for savings, retirement, and vacation money. Find a budget that works for you in the long run.
Second, create a healthy mindset about spending. Identify your signs of overspending and come up with a plan to stop it. Continue honing the spending habits mentioned above about cooking more at home, sticking to a grocery budget, and more.
10. Consult a Credit Counselor
If you are struggling with your debts now and you can’t seem to wrap your head around them, talk to a credit counselor. There are non-profit credit counseling organizations where you can find help for free. Talk to a counselor and trust that your consultation will be confidential and free from any judgment.
Conclusion
The sooner you acknowledge your problems with debts, the sooner you can tackle them and pay them off. Try the tips mentioned above so you can live a debt-free life and feel like you can breathe again.
Apart from these debt-free tricks, learn also some budgeting tips so you can be prepared to tackle problems emotionally and mentally. Remember to be financially wiser and stronger than before.
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