Are you one of the millions who are constantly trying to get relief from credit problems? Millions of Americans are still in debt and it seems like they are bound to stay that way for a very long time. It seems that all of our budgets will always include a debt payment fund entry. Will we ever be free from credit obligations?
In an article published on The Wall Street journal website, consumer debt continues to rise. Although it was the slowest in 6 months, fact remains that it continues to grow. As the article on WSJ.com reveals, the non-mortgage debts of Americans grew by 4.8% in November. It was slower than the 7% back in October. The statistical information mentions that the slow growth in caused by the lower credit card spending.
Despite this slow growth, you need to remember that even if it is smaller than the past, it is still an increase. It still means we need to pay off more than what we owe in the past.
That being said, getting a foothold on your finances means growing your debt payment fund significantly. But what can you do to give it an increase that is enough to put a huge dent on your debt balance?
4 ways that you can significantly boost your debt payment fund
Although people would increase their income to pay off debt, there are extreme ways that you can cut back on spending to grow your debt payments. We have 4 suggestions for you that will require a huge sacrifice from you and your family. If you want to get out of debt fast, no sacrifice should be too great to get what you want to happen.
Live on one income.
You know how couples decide to have a child and they have to make huge adjustments so they can survive on one income? After all, being their for your child is the greatest gift that you can give them. This is also something that you can do. You can discuss with your spouse or partner how you plan to do this but make a commitment to cut back on your spending so you can afford to live on one income. You can choose to live on the income of the one who earns the most. That should give you more room in your budget.
If you think that this is too extreme, you can try to adjust to it slowly. During the first month, you can allocate 25% of one income entirely for debt payments. As each month passes by, increase that by 25%. By the fourth month, you should be able to put the whole income into your debt payment fund.
Get rid of your car.
This is another extreme measure that you may want to seriously consider. If you think that you cannot live on one income alone, what about giving up your car? Did you know that the average annual expense that a person spends on a car is more than $9,000 a year? At least, this is what AAA.com reports back in April 2013. If you gave up your car, you will have to deal with the hassles of commute but you get to add $9,000 in your debt payments. You don’t have to worry about car maintenance/repair, insurance, rising gas prices and other expenses associated with owning a car. You can opt to join the commuters or you can ride your bike to work – whatever is applicable. If you opt for the latter, you get to exercise as you go to work and back.
If you have two cars, you can opt to give up just one car and carpool with your spouse/partner. Or you can give up both cars. That will mean an additional $18,000 a year to be sent to your debt payment fund. Do not worry because you really do not have to give up on a vehicle forever. This is only until you pay off all of your debts.
Downsize your home.
Another extreme adjustment that you can do to pay off your debts is to downsize your home. Mortgage loans are still the biggest debt that the average American household owes. If you can get rid of this, you can really put a lot of breathing space into your budget. We are not saying that you give up home ownership like our suggestion with your car. But what we are trying to say is to just live in a smaller house. This will really benefit you in more ways than you know. Instead of having all the extra rooms, just live in a home that has one room for the couple and one for each kid. Or have them share. One dining room and living room should be enough too. You do not really need a big backyard or front yard. You can sell your big house and buy a smaller one in cash. Settle your other debts and live debt free. The upkeep on a bigger home is more costly. Not only will you solve your mortgage problems, you can significantly lower your monthly expenses.
Stop using your credit cards.
Lastly, you can increase your debt payment fund if you stop using your credit cards. These card purchases can be quite a burden if you end up letting them grow. If you are used to making purchases with your card, you have to stop doing that. At least, you can give it up until you have full control of your finances. Buy things in cash for now. It is one of the most effective ways to make sure that you will live within your means.
If you do not want to close cards, you can use it every now and then – like once or twice every six months but only for small purchases. And make sure that you will pay them off immediately. What you are paying on interest can be added to your debt payment fund instead.
How to make paying off debt successful
Doing these extreme measures will really help you solve your debt problems. Increasing your budget for debt payments is one way that you can quickly get out of debt. As you diligently send in your monthly contributions, you can go on your way to achieve a life of financial freedom.
But before you can really achieve that, you have to completely pay off your debts first. Here are some tips that will help you pay off what you owe.
Get the support of the whole family. Everyone in the household should do their part as you try to grow your debt payment fund. Even your kids should be in on the effort. If anything it will help them understand the repercussions of irresponsible financial behavior.
Put off major purchases. It is not a good idea to make expensive purchases while you are still paying off your credit obligations. If it is not a matter of life and death, opt to use the money to get rid of your balance first.
Be very frugal with wants. We are not saying that you should completely eliminate your entertainment activities but you may want to be very frugal about it. Look for cheap alternatives that will help you enjoy your favorite activities without compromising your debt payments.
Getting out of debt can be as fast as you want – but that means you need to make some sacrifices. It doesn’t matter how you choose to get out of debt. There will always be changes in your life that has to be implemented. You cannot live the way you used to because that got you in debt. And if you have to make changes, why not make it as drastic as you can. The more you can sacrifice, the faster you can get out of debt.