It’s 2019. Unemployment is low, the economy is good, so you might be thinking that you’re off the hook when it comes to your finances. However, a recent survey showed that over 29% of Americans have more credit card debt than they do savings. And that’s not counting other kinds of debt, like car loans, student loans, and of course major loans like mortgages.
Of course, not all debt is bad. Mortgages are the only way that a typical American can afford to buy a home. A small amount of student loans can make a huge impact on someone’s education and impact their future earnings. But when it comes to achieving financial freedom, debt is the biggest barrier of all.
But there’s a difference between having debt and doing something about your debt. Even if you feel like you’re at the maximum your budget will allow, there are some great strategies you can use on how to pay credit card debt fast. Let’s talk through the best strategies to get you out of debt faster than you ever thought possible.
1. Refinance for a Better Rate
One of the most stress-relieving strategies when it come to tackling long-term debt is refinancing. With refinancing, you essentially transfer an existing loan from one lender to another. The goal is to achieve a lower interest rate with the new lender than you had before. In theory, this means you’ll pay less in interest over the life of the loan, and you’ll pay it off faster.
Refinancing isn’t a one-size-fits-all solution. However, it can be a lifesaver to help you overcome the burden of high-interest loans. Consider a progressive lender like SoFi to see what rates you could qualify for if you refinance. This is a great option for private student loans, car loans, or even a single loan to consolidate a large amount of consumer debt (aka credit cards).
2. Transfer Credit Card Debt to a New, 0% Card
Many credit card companies will offer a low introductory interest rate. It could be as low as 0% for new cardholders. This is a promotion that typically lasts anywhere from 6 to 18 months, depending on the card.
If you just can’t seem to get ahead of your credit card debt, transferring it to a 0% card may be just the boost you need. Even though balance transfers often come with a fee, it can be well worth the small up-front cost when you consider the total you’ll save on interest in the long run. Plus, you may qualify for extra bonus rewards by opening a new card, which may help you even more in the long run.
The reason this strategy may sound too good to be true is because there’s a catch. This strategy only works if you continue to work toward paying off the balance. Ideally, this means making payments that are significantly more than the minimum payment due each month. Transferring the old balance to a new card and then continuing to spend more than you pay will only get you further down the debt rabbit hole.
3. The Debt Snowball
Even if you haven’t heard of Dave Ramsey, you might have heard about his famous debt snowball strategy. It’s a way that helps you get out of debt by building upon your momentum. Once you pay off your smallest debt, you shift that debt payment toward your next largest debt. And so on, until you’re debt free.
The reason this method works is because it’s based on behavior psychology rather than math. Most strategies tell you to pay off your highest-interest loan first. And if you always behaved like life was a spreadsheet, that’s exactly what you’d do. But in real life, people are motivated by winning, not by numbers. (Let’s be real, if you were motivated by numbers, you wouldn’t be in debt in the first place.)
The debt snowball makes it possible for you to achieve victory faster. You start by paying off your smallest debt, regardless of the interest rate, and you get a victory! And that feeling of accomplishment fuels you toward the next win.
Also Read: Dave Ramsey Baby Steps: Is It Your Path to Financial Freedom?
4. Adjust Your Payment Schedule
Have you ever noticed a month when you get three paydays instead of two? If so, you’re on a biweekly payment cycle, and you are poised to take over the world. Just kidding. But you are poised to make a huge dent in your debt in 2019 by making a few small tweaks to how you pay. People who get paid biweekly get 26 paychecks a year – one every two weeks. However, most of us make debt payments just once a month. Do you see where this is going yet?
In this strategy, you can take advantage of your payment schedule to add another complete payment every year. Rather than making 12 monthly payments, set up your debt payments to align with your actual paycheck. This will add up to 26 half-monthly payments; a total of 13 monthly payments in a year. Mathematically guaranteed to increase your payments without impacting your monthly budget at all!
5. Set a No-Spend Weekend (or Week!)
Even if you stick to a budget religiously, you can always find a little extra wiggle room to make extra payments. Paying off your debt quickly doesn’t have to mean living in squalor for forever!
Instead, commit to at least one no-spend weekend or even week every month. This can help you adjust both your spending and your mindset toward fun. As you’re seeking out free concerts or creative recipes to use your pantry staples, you’ll be actively saving money that you can use toward making extra debt payments. Plus you’ll be avoiding activities that might inadvertently land you in more debt.
6. Leave the Plastic at Home
This might go without saying, but it’s practically impossible to spend money on a credit card when you don’t have the card with you. For this strategy to work, you also need to make sure you disconnect Apple Pay and all your other digital wallets.
Studies show that people who pay with cash tend to spend less than people who pay with a credit or debit card. Leaving your credit cards at home in a safe place is one of the easiest ways to break any overspending habits you might have. Even a small reduction in your spending means you’ll have more money to pay off debt faster.
7. Make More Money
Last but not least, increasing your debt payments will almost certainly help you get out of debt faster. You don’t have to take on another full-time job to make some extra cash!
Try a side gig that you can work around your schedule, like driving for Uber or Lyft. Or if you have a spare bedroom or even a couch, consider listing it on Airbnb to turn that extra space into extra money. Even hobbies like photography, music, or writing can all be turned into freelance opportunities. All it takes to land a side gig is a little creativity and the drive to make it happen!
The bottom line when it comes to paying off your debt is to never give up! Keep moving forward and use the strategies here to achieve your debt-free goals. Financial freedom isn’t a dream, it’s just a series of habits and smart choices.
