Credit card balance, car payments, students loan, you name it, I have had it all. According to a report from NerdWallet, the average U.S. household with credit card debt has an estimated $6,929 in revolving balances, or balances carried from one month to the next. Debts can be overwhelming sometimes, but they are manageable if you have a plan in place.
Today, I will share with you five useful tips that I use to pay off my debt. If I can do it, so can you..
1) Create a budget.
A budget can be simple and doesn’t have to be complicated. First, you have to figure out where your money goes. For example, every month, your rent is $800, gas is $120, phone is $90, and groceries is $100 … The more accurate the values are, the better. If your average monthly income is $2,000 and you have to spend a total of $1,110, there is $900 left for you to save or pay off your debt.
If you don’t know how to create a budget, I have made a handful of Excel templates in my Free Resource Library. All you have to do is to sign up. These templates are used to track your budget, strengthen your finance and help you pay off your debt.
2) Pay off your BAD debt first.
Don’t know where to put your extra cash? If you have multiples financial troubles line up, there are 3 steps you should do to help you decide. First step is to understand what kind of debt you are dealing with. Bad debt is usually in the form of credit card debt or a personal bank loan. You should tackle bad debt first. Second step is to figure out what give you the biggest boost. 3,000 credit card bill with an 18% interest rate is far worst than $600 bill at 6% interest rate. The last step is to think about credit score. If you are planning to build up your credit to purchase a house or a car later, it might be worth it to tackle credit card debt.
3) Pay more than the medium balance.
If you are successfully tracking your expenses, budget on the daily and save a lot more money, you definitely should put it down more towards your debt. You need to step it up a notch by setting up a timeline to pay off debts. Forget the slow-debt-payoff strategy, step up your game and make a commitment to pay it off within weeks.
If you don’t know what is the best tools to track your expenses, “How to Track Your expenses” includes all the tools I personally use to track my spending. Check it out because it works for me.
4) Burn your credit cards
How much credit card debt is bad? ALL OF IT. According to Consumer Credit, the goal is to not spend more than 10% of what you make monthly on credit card. “It’s bad to find yourself in a situation where what you are required to pay per month for your credit cards is in excess of 10% of your average monthly income, e.g. having a minimum of $400 when you make $4,000 on average a month.” ConsumerCredit.com
Yes I said it: just get rid of all your credit card and you won’t have that problem again. But Quan, what do I use instead?”CASH”
I also want to share TIPS TO PAY OFF CREDIT CARDS FAST.
5) Put your work bonus or Tax Credit towards your debt.
Try to avoid that temptation of spending that extra cash on the vacation or a new handbag. It is tough, but you need to stay focus on your goal. Remember, the more money you put towards debts, the faster it will get paid off. Vacation destinations still there. The handbag will be out of style and depreciate in values.
Your turn
Do you have any debt paid-off story you would like to share? Comment below because I want to learn form you, my wonderful readers.
Credit card balance, car payments, students loan, you name it, I have had it all. According to a report from NerdWallet, the average U.S. household with credit card debt has an estimated $6,929 in revolving balances, or balances carried from one month to the next. Debts can be overwhelming sometimes, but they are manageable if you have a plan in place.
Today, I will share with you five useful tips that I use to pay off my debt. If I can do it, so can you..
5 Simple Ways to Pay Off Your Debts
- Create a budget.
A budget can be simple and doesn’t have to be complicated. First, you have to figure out where your money goes. For example, every month, your rent is $800, gas is $120, phone is $90, and groceries is $100 … The more accurate the values are, the better. If your average monthly income is $2,000 and you have to spend a total of $1,110, there is $900 left for you to save or pay off your debt.
If you don’t know how to create a budget, I have made a handful of Excel templates in my Free Resource Library. All you have to do is to sign up. These templates are used to track your budget, strengthen your finance and help you pay off your debt.
- Pay off your BAD debt first.
Don’t know where to put your extra cash? If you have multiples financial troubles line up, there are 3 steps you should do to help you decide. First step is to understand what kind of debt you are dealing with. Bad debt is usually in the form of credit card debt or a personal bank loan. You should tackle bad debt first. Second step is to figure out what give you the biggest boost. 3,000 credit card bill with an 18% interest rate is far worst than $600 bill at 6% interest rate. The last step is to think about credit score. If you are planning to build up your credit to purchase a house or a car later, it might be worth it to tackle credit card debt. - Pay more than the medium balance.
If you are successfully tracking your expenses, budget on the daily and save a lot more money, you definitely should put it down more towards your debt. You need to step it up a notch by setting up a timeline to pay off debts. Forget the slow-debt-payoff strategy, step up your game and make a commitment to pay it off within weeks.
If you don’t know what is the best tools to track your expenses, “How to Track Your expenses” includes all the tools I personally use to track my spending. Check it out because it works for me.
- Burn your credit cards
How much credit card debt is bad? ALL OF IT. According to Consumer Credit, the goal is to not spend more than 10% of what you make monthly on credit card. “It’s bad to find yourself in a situation where what you are required to pay per month for your credit cards is in excess of 10% of your average monthly income, e.g. having a minimum of $400 when you make $4,000 on average a month.” ConsumerCredit.com
Yes I said it: just get rid of all your credit card and you won’t have that problem again. But Quan, what do I use instead?”CASH”
I also want to share TIPS TO PAY OFF CREDIT CARDS FAST.
- Put your work bonus or Tax Credit towards your debt.
Try to avoid that temptation of spending that extra cash on the vacation or a new handbag. It is tough, but you need to stay focus on your goal. Remember, the more money you put towards debts, the faster it will get paid off. Vacation destinations still there. The handbag will be out of style and depreciate in values.
Your turn
Do you have any debt paid-off story you would like to share? Comment below because I want to learn form you, my wonderful readers.
Remember, I have a FREE RESOURCE LIBRARY where you can find all sort of templates to have you budget and get your finance back on track.