When you have a lot of personal debt, it can have a huge negative impact on your life and takes away your financial freedom. Many US households have found themselves facing a debt crisis, especially with the rising inflation and interest rates, which made many people lean on credit cards to make ends meet.
Even though certain types of personal debt like car and student loans, mortgages, and business loans are crucial for pursuing our career and life goals, other types of debts can be quite intimidating. Credit card debt is one of the main obstacles for many people around the world. It can be a convenient and safe way to pay for purchases without carrying large amounts of money, but it can become crippling if not managed properly.
How to Reduce Personal Debt
In this brief guide, we’ll talk about common ways to reduce your debt in 2023 and enjoy your journey to financial freedom. While few people have the luxury of pursuing their dreams without having to worry about debt, it’s important to know how to navigate through your costs and reduce potential debt. Let’s begin!
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Earn Extra Cash
If you’re looking for new ways to make money from home and boost your financial freedom, there are lots of options you can consider. From webcam models to freelance writers and web designers, many people are making a very good additional income from home. This can then be used to help reduce your personal debt.
Thanks to modern technology, it has now become easier than ever for people to make extra cash to boost savings or reduce debt. Doing some work online in your spare time is an excellent way to bring down your debt and all the stress that goes with it.
With lots of opportunities to choose from, you should make sure you think about the type of work that is right for you. Once you have decided, you can look for opportunities from the comfort of your own home. You can also do the work from home, which means a convenient method of earning more money.
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Tackle Your Debts
Writing down debt is helpful to tackle your spending habits and make a list of your expenses. You can track your expenses by keeping a list each month with the required and optional costs for your household to make sure you’re not overspending every month.
Make sure you write down each interest rate associated with your debts since it can be hard to keep track of what you owe if you have no idea how much interest you are paying and whether it is fixed or variable.
Once you’ve determined the debts, it’s time to tackle them. Focus on paying the debt with the highest interest rates first. You can contact your lender and try out your luck by asking for a lower interest rate, especially on your credit card.
Also, consider transferring your debt onto one credit card with a 0% introductory interest rate. It can be quite overwhelming if your credit card debt is scattered across multiple credit cards, with all those bills coming up each month. To avoid missing repayments and to get better interest rates, consider transferring your debt to one card.
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Credit Card Diet
We’ve mentioned earlier the challenges of owning a credit card and using it for every little purchase. If you want to reduce your debt and go debt-free as soon as possible, you might want to consider avoiding further credit card debt by transferring your spending habits to a debit card. Or paying with cash.
Many people are in the habit of paying with a credit card for pretty much everything. It’s convenient, safe, fast, and easy; why you wouldn’t do it? Well, you can easily accumulate a lot of debt if you don’t pay attention to your spending habits and the amount that’s been piling up on the credit card.
You need to understand your spending habits, see how much you’re earning and spending each month, and make a budget. Try to cut costs wherever possible. For instance, you can cut out an expensive gym membership or your Netflix subscription to help reduce outgoings and recurring payments on your credit card.
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Consolidate Loans
In addition to increasing your income by doing some online work, you can also reduce outgoings by consolidating any loans you have. A consolidation loan can wrap all of your smaller loans into one bigger one, and you can get a more competitive rate of interest to reduce your repayments and overall debt. You can research these loans online to determine your eligibility and how much you could save.
Save Up!
If you want to overcome debt, do not indulge yourself in unnecessary spending and the purchase of irrelevant things. You might want to take advantage of the hottest sale right now at Shein, but balancing out your debt and saving for your future is far more important.