When you were young, you dream of becoming an adult to earn money for yourself and freely do what you want. Little did you know that a huge pile of monthly expenses and debts are waiting for you once you enter adulthood!
Credit card balances, student loans, mortgages, unpaid monthly utility bills—the list of your debt and expenses goes on and on! Assuming you are in this situation, you might often wonder about the best and quickest way to pay off all those debts and start saving money for your future life plans.
Saving money is tough when most of your income goes directly to debt payments. That is why Electronic Esusu, a digital payment solution, had curated some useful tips on how to get out of debt using the right tools and mindset. Check them out below:
- Build a budget
To make the most of your salary and avoid spending it all as payment for your debts, you need to build an effective budget. Most financial experts recommend the 50/30/20 budget scheme:
- 50% on essential expenses
- 30% for wants
- 20% for savings and debt
In your case, since you want to pay off your debt in the quickest way possible, it is a better idea to allocate the 30% budget for your wants to make extra debt payments. This does not mean that you can’t have fun anymore! You can still go out and treat yourself as long as you do not overspend on expensive luxuries.
- Decide which debt to pay first
Now that you have your budget, it is now time to decide which debt should be paid first. A useful tip you should try is to pay those with high-interest rates such as credit cards first. Though its minimum payments are often low, it will take much longer to pay off the whole balance, thus it will cost you more. As much as possible, pay more than the minimum for each month. This way, you will not just avoid paying interest for a long time, but you can also get cashback rewards.
- Get a part-time job
Are you good at coding, web design or writing? Do you have plenty of unused clothes you can sell? Is there an extra room in your house that you can rent out? Consider using your resources and skills to get part-time jobs and work some side hustles. This will earn you extra cash to pay off your debts.
Cutting off your budget is sometimes not enough to duly pay your debts and the only way you can get some extra money is to get another job or make a small business. It can be tiring, but once you watch your debt go down you will realize that it is all worth it!