Debt is one of the biggest financial burdens that people can face, but it doesn’t have to be overwhelming. There are some actionable steps that you can take to get out of debt and gain your financial freedom back, so don’t give up just yet.
First thing’s first: figure out how much money you owe. It will surprise you how easy it is to lose track of your debt when there are so many accounts to keep track of. It can be hard to take a step back and look at your entire financial situation, but it will be worth it in the end when you’re no longer feeling like any action you take is futile because there’s too much debt.
Once you’ve figured out how much debt you have, it’s time to start working towards getting rid of it. Here are seven ways to get out of debt and gain financial freedom:
#1 Figure Out Your Debt Snowball Plan
One of the most popular ways to pay off your debt is by using a “debt snowball” plan. This requires you to list all of your debts, starting with the smallest and working your way up to the largest one. Then, you’ll pay off your debts one by one, starting with the smallest and bringing yourself closer to financial freedom every step of the way.
#2 Make More Money
You might be thinking that if you already owe money to multiple people, adding more debt is a bad idea. But this isn’t always true. As an alternative to making more money, it can be incredibly effective to simply spend less.
However, if you need a way to make more income in addition to living within your means, there are some options. You could get a second job, start an online business, sell unwanted items online, or even just go back to school for another degree if that’s something that interests you.
#3 Create a Budget and Stick to It
If you haven’t created a budget before, the biggest advantage is that it offers you an overview of how much money is going out each month. This way, if there are any expenses that you can cut back on or find ways to save on, they’ll be more obvious.
To create a budget, all you have to do is list the money that you bring in on one side of a sheet of paper and list your expenses on the other. Then, break it down from there — income first, then necessary expenses like rent or utilities, and from there find ways to cut back where possible.
#4 Think Long-Term
It can be easy to get discouraged if you haven’t made much progress on your debt, but sometimes putting yourself in a better position for the future is all it takes to make things seem easier.
For example, if you plan on buying a house or getting married within the next few years and want to start saving for it now, it might be a good idea to see if you can increase your retirement contributions. It may seem hard now, but you’ll thank yourself later when things have calmed down and you’re enjoying the freedom that comes with being debt-free.
#5 Find a Side Hustle
Whether it’s through a second job or starting a business from home, using your free time to generate some extra income can help you get out of debt faster. This is because the more money you make, the less money you’ll need to pay off what you owe.
#6 Keep Your Eye on the Prize
Even though it’s important to know how much money you owe and which debts are highest or lowest, it’s also important to stay positive. You can’t change your financial situation immediately, but you can control how you react to it.
One way that you could do this is by rewarding yourself along the way for making progress on your debt. This could be something small like buying a latte every morning or something bigger like taking a trip in a few months that you’ve been saving up for.
#7 Look into Filing for Bankruptcy
Sure, the idea of bankruptcy sounds scary, but there are two types of bankruptcy that you can consider. Chapter 7 is a liquidation process, meaning that anything you owe to creditors will be wiped out. Chapter 13, on the other hand, is a repayment plan that requires you to pay off at least some of what you owe within three to five years.
If the latter sounds like it could work for you, your next step is going to be looking into hiring an attorney in your area that can help you. This way, you can rest assured that you can get on the right track to financial freedom without worrying about anything else.
The most important thing you can do when it comes to debt is to stay positive. It’s easy to get discouraged, but if you’re able to take a step back and focus on the end goal of being out of debt, then things will seem much easier.