Whether you have a large debt or you’re just trying to pay off a few credit cards or small loans, it is still possible to get out of debt in a year or less if you’re willing to work hard at it. This means not only earning more and spending less, but also learning a few tricks on how to make the most of every cent.
Figure out exactly how much you owe. Not only the numbers but to whom and on what terms. Make out a table that includes the percentage you’re paying, the minimum monthly payment, any incentive you’re offered if you pay faster or whether penalties are accumulated and how. While the numbers may feel overwhelming when added up together, it will give you control over the situation and get you started.
Pay off the debts with the higher percentage first. If you have more than one that fall into that category, figure out how much you need to pay on each one every month in order to finish them off fast. If you have a large number of debts, then divide your payments equally.
Pay more than the minimum each month. The higher your monthly payments, the less you will pay in final fees and percentages. You need to be paying at least 3 times the minimum in order to be able to pay off your debt in under a year.
Create a budget and stick to it. How extreme your budget is depends a lot on the amount of debt you have and how income you have every month. If you have a large debt, your budget should cover just the bare necessities (rent or mortgage, utilities and food). Anything else should either be scrapped or cut down considerably.
Learn to live without luxuries. Color your hair at home, give up going to the movie theater and start shopping at discount stores rather than getting brand name merchandise. While these may sound like small things, every cent adds up. If you make paying off your debt a priority, then every penny counts.
Talk to your debtors. Many will forgive penalty fees or will agree to lower your percentage if you agree to pay the debt within a specific amount of time. At the least, you might be able to work out a payment plan that fits into your new schedule.