5 Ways to Chip Away at Your Debt Today header image

5 Ways to Chip Away at Your Debt Today

Debt can be a tough subject to think about, let alone tackle. Did you know that the average American household has credit card debt totaling over $16,000? Carrying that kind of debt means your finances take a hit, and you’re less likely to be able to put that money into something else, like emergency savings or retirement. Paying off debt can seem like a huge task, but don’t get discouraged! Try a few of the tips listed below to reduce debt and get yourself on the track to saving.

1. Think Positively
It seems like an odd tactic, but it could be crucial to your success. Let’s face it, budgets are a drag. Instead of restricting yourself, picture your financial goals as something you get to do, not something you must do. By treating it as a challenge, you’re more likely to follow through — and less likely to resent debt advice.

2. Start a Budget
Of all the ways to reduce debt, keeping a budget is one of the most important. Eliminating your debt requires knowing exactly how much money you have and how much you’re spending each month. Make a list of all of your expenses, from rent or mortgage to your water bill and approximately how much you spend on food each month. Then tally all your debts and make note of your interest rates. This information will be important in determining your next steps.

 

5 Budgeting Myths You Need to Stop Believing Right Now

 

3. Trim Extra Expenses
This is the hard part, but if you want to get rid of debt, it’s worth it. Take a look at that budget, and see where you can cut back. Managing your debt often starts with finding those extra savings. Some common places to find extra savings include:

  • ·         Cable. Cut the cord and go streaming. Do you really need all those channels?
  • ·         Cell phone. Negotiate for a cheaper plan, and hold off on getting the newest model if your old phone is working just fine.
  • ·         Food. Brown bag your lunch, and make your coffee at home. Eating out adds up quickly, and making food at home is one of the quickest and easiest ways to save.

Trying to save? There are apps for that!

4. Tackle High-Interest Debt First
Figure out which of your loans has the highest interest rate, and hit it with all you’ve got! By paying the minimums on your other loans and putting any extra money toward the one with the highest interest rate, you’re saving money on interest. Once that debt is paid, pick the next-highest loan, and do the same. This gives you a game plan for reducing your debt, making it that much more manageable.

5. Celebrate Your Victories
Mark your victories in managing your debt, however small. Treat yourself (in a budget-friendly way!) by going to a movie or out for lunch. Progress is progress, and it can give you a small taste of how you’ll feel when you’re finally debt-free.

Looking for insurance to fit your needs and your budget? Your local Farm Bureau agent can help! Whether it’s helping you save money by bundling your home and auto policies, or helping you save for retirement, he or she can help set you on a path that will help you protect what matters most in your world.

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