Debt is one of those things we either face head-on or ignore completely. That’s typically because how much money we have to repay is either a manageable amount or we’re completely drowning in it. Housing, transportation, education, medical bills—these are all things that we need to live a secure, fulfilling life, but also the things that can land us in deep debt.
In short, you don’t have to buy luxury cars and go on endless shopping sprees to accrue debt, regular ol’ living is expensive enough. So, where do you go from here? Well, making more money to pay off what you owe is the obvious answer, but what do you do if that’s not an option right now? You double-check your resources.
Need help meeting your financial obligations? Here are 3 ways to seriously knock down what you owe—consistently and efficiently— and come out on top.
Revisit Effective Debt Repayment Strategies
The easiest way to go broke while paying off debt is by throwing money at bills with no rhyme or reason. Like all other finance-related things, paying what you owe requires patience and strategy—especially if you owe a large amount.
While this may sound intimidating, I promise you it’s truly not. In fact, there are 3 main strategies that most people use to simplify debt repayment into something achievable:
- The Snowball Method. Pay the smallest debt as fast as possible while paying the minimum amount possible on all other debts. Once you’re done paying off the first bill, move onto the next debt and repeat the process. A win is a win—even if it’s small.
- The Avalanche Method. Pay the highest debt or the one with the highest interest rate while paying the minimums on all the others. It can help you knock out the biggest threat to your financial security while also keeping other debts under control.
- Debt Consolidation. Combine all debts into a single bill and chip away at it with one payment each month. This brings scattered fees and bills into one account and makes it easier for you to focus on repayment without also thinking about multiple interest rates and due dates.
Of course, if you only have a few small bills or medium-size debt that it’s easy to manage, you may not have to consider a strategy after all. Just put as much money toward it as you can every month—or even every two weeks—and be done with it.
Utilize Apps Like Albert Genius
There are tons of personal finance apps and programs out there made to help you with budgeting, investing, saving, and anything else you need. However, Albert is one a kind. Albert is a financial service that helps you automate all aspects your finances.
From helping you craft a budget by identifying and categorizing recurring bills based off of your monthly spending habits, to automatically pulling money from your bank and placing it in a savings account every week, Albert guides you into personal finance habits that are healthy and sensible.
Now why are they important for debt management? Well, Genius—the paid version of Albert that gives you access to extra tools and real-life experts—helps you figure out exactly what you need to attain real financial growth and wellness by identifying bad habits and pushing you to implement good ones.
For as little as $6 a month, you’ll have access to instant savings, cash advances, and coverage kits that help you find the best plans for you; For as little as $1, you can start investing; and for $20, you can link with your very own financial advisor to help you get your finances straight—debts included.
Rethink Your Bills and Income
The one unavoidable drawback about paying off debt is that, if you don’t have the money to do it with ease, you’ll need to make some sacrifices. To be totally clear, necessities should not be sacrificed. Having adequate housing, food, water, transportation, and clothes is necessary for a comfortable life on the most basic level.
However, you may have to give up or find another way to enjoy some of the simple pleasures of life such as streaming platforms, eating out, partying with friends, or even driving everywhere you’d like to and spending whatever on gas.
Ideally, you should be dividing your income into three categories: 50% on needs, 30% on wants, and 20% on savings. However, this only applies to people who can actually afford to budget in this way. After all, you cannot budget yourself out of poverty and if you barely make enough money to survive, asking yourself to “budget in” savings and debt repayment is highly unrealistic.
On the flip side, if debt is the very reason why you’re in a financial jam and paying it off is possible for you, it’s time to make some adjustments to your lifestyle and set some realistic goals for financial security. This could be anything from temporarily getting a second job to not using any more credit cards or loans until you pay your current ones off.
It may be difficult at times, but financial choice and control are all yours.