Millions of Americans are saddled with credit card debt, and the younger generations are getting hit hard by it. A recent study found that nearly 30% of Millennials and Gen Z carry at least $1,000 in credit card debt. If you’re in this situation, it’s essential to learn how to get out of debt fast, as the longer you carry a balance, the harder it’ll be to ever get your finances back on track.
1. Figure out what you owe
One of the first steps to getting out of debt is understanding what you owe. Start by listing all your cards and listing the total debt owed, interest rate, and annual fees. This will give you an idea of how much money you’re spending on each card and will set you up for the next step.
2. Decide which debt method you’ll use
Two popular strategies for paying off interest-generating debt are the Debt Snowball and Debt Avalanche methods. Both will help you get out of credit card debt, but you must understand the different ways each work with your natural motivations before researching how to start debt snowball or debt avalanche.
The Snowball Method ranks your debts in order of amount owed and focuses on knocking out the smallest debt first. This is an excellent method for those who need to see quick wins to keep them on track.
The Avalanche Method ranks your debts by interest rate and focuses on paying off the debt with the highest interest first. The Avalanche Method is better for reducing the total debt and interest you’ll pay but only works for those who can stay patient and wait for long-term payoffs without becoming sidetracked or demotivated.
3. Look into affordable debt consolidation options
If you can’t find a way to pay off your debts quickly, consider looking into affordable debt consolidation options. Debt consolidation can help combine multiple smaller debts into one larger loan that you can pay off over time. This is a great option for those who are struggling to make payments and need some assistance getting out of debt.
4. Take advantage of income-driven repayment plans
An income-driven repayment plan is one of the best ways to get out of credit card debt. These plans allow you to pay back your loans based on your income and adjusted monthly payments.
5. Take a hard look at your spending habits
Once you’re on the right path to becoming debt-free, you’ll need a plan to stay on track now and once your credit cards are paid in full. Changing your spending habits can be challenging because it often involves changing the way we live our lives. But it’s worth it to get out of debt and live a life without worrying about money.
6. Consider using a personal finance advisor or credit counselor
Not everyone can tackle their finances on their own, which is why it’s important to consider using a personal finance advisor or credit counselor. Many credit counseling services are low-cost or even free, depending on your income level. Advisors can help you create a plan for getting out of debt, navigate the credit card process, and more.
The bottom line
There are many steps that you can take to get out of debt fast, but it starts with deciding that action needs to be taken. The good news is that it’s never too late to get started on your journey to becoming debt-free, so don’t think your situation is permanent or grim. With a little effort, you can make progress and eventually reach your goals.
Name: Michael Bertini
Job Title: Consultant