Are you one of the 20 percent of American households that spend more than they make? Perhaps you’re one of the 44 percent of all credit card holders who carry a balance? Or maybe you’re one of the 7 percent of households in the United States who have a loan payment that is 30 days or more past due.
No matter which scenario you might be in, there are some five things you can do right now to start forming new spending habits that will help you become debt-free.
1: Pay down debt as much and as quickly as you can.
There are several approaches to paying down debt. You can choose to pay down the smallest balances first to give yourself a sense of achievement, or pay off debts with higher interest rates first. Either way, start paying it down.
2: Pay with cash when you can.
If it’s possible, then pay with cash. Avoid using credit cards for most purchases, unless you can pay off the balance quickly.
3: Stash that cash when you can.
Life happens when you least expect it. It’s not uncommon for unplanned purchases to take us by surprise and put us further into debt. If you place $10 a week into a savings account, you’ll have more than $500 saved by the end of the year.
4: Keep spending in the can.
Ask yourself: Did I really need to purchase that? Cut back where you can, spending your hard-earned money only on essentials, especially if you are in debt pay-down mode.
5: Earn more if you can.
If you can get a promotion, start a new job at a higher wage, or land a second job, you would have extra money to pay down debt and cover your expenses. But that’s not always possible. Here are some other options to boost your income or reduce your expenses:
• Sell a large item to help pay off a big debt.
• Change your transportation habits, such as using public transportation or carpooling, saving on your gas bill and possibly a car payment.
• Have a garage sale—get rid of the stuff you haven’t used over the past year.
There are plenty of strategies and resources for getting yourself out of debt. The important part is finding one that works for you and sticking to it.
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