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HomeBlog Personal FinanceThe 8 Things Smart People Do to Get Out of Debt Faster
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The 8 Things Smart People Do to Get Out of Debt Faster

December 30, 2016 by National Debt Relief

couple in their 50sAre you sick of living from paycheck to paycheck? Do you feel as if you’re adrift in a sea of debt? Would you like to have a better, debt-free life?

Getting out of debt can take time and a lot of hard work. This can be especially true if the majority of your debt is credit card debt as it generally has higher interest rates than any other type of debt.

Fortunately, there are strategies that have been developed by smart people that can help you become debt free faster and with a lot less pain. So, if you’re goal is debt relief then consider doing these eight things.

Smart people make more than their minimum payments

American families now carry an average of $15,609 in credit card debt. If you owed this much on a credit card at the typical APR of 15% and made just the minimum payment of $625 every month it would take you 13 1/2 years to pay off the debt. And, of course, this is if you don’t put any new charges on that card during all those years.

What smart people do is make more than their minimum monthly payments. This both saves a lot of interest throughout the life of the loan and will get the debt paid off faster. For example, if you were to increase that monthly payment to $900 you’d have the debt paid off in just 20 months versus the 157 months it would take if making just the minimum monthly payment.

two men shaking handsSmart people snowball their debts

This is where smart people list all their debts from the one that has the smallest balance down to the largest. They then concentrate all their efforts on first paying off the debt that has the lowest balance while making at least the minimum monthly payments on their other loans. Once they get that first debt paid off they move on to the one with the next smallest balance until it’s paid off and so forth.

Dave Ramsey named this the “snowball” effect because when you first pay down the debts with the smallest balances you’ll develop momentum to continue paying down your debts just as a snowball gains momentum when it rolls downhill.

Here’s a video that explains why the debt snowball is the best and fastest way to pay off debt along with an example of exactly how it works.

Smart people live on a “bare-bones” budget

Smart people create bare-bones budgets and then live on them instead of just spending their money willy-nilly. Fortunately, creating a budget is not nearly as difficult as it once was. There are apps available such as Mint, Good Budget, PocketGuard, Mvelopes and Home Budget that make creating a budget a snap.

However, there is no such thing as a one size fits all bare-bones budget. It will be different for everyone. But what it boils down to is identifying and eliminating the “extras,” which could include cable television, eating out, gym memberships and all those drive-through coffees. The good news here is that your bare-bones budget doesn’t have to be permanent. Once you eliminate your debt you can start adding back those extras into your budget.

Smart people get their side hustle on

Smart people understand that if they want to get their debt paid off as fast as possible then just living on a bare-bones budget isn’t enough. They also find side hustles or ways to increase their incomes so they will have more money to apply to their debts. One of the most popular of these is driving for Uber as it offers total flexibility as you can drive whatever hours and days that best fit your schedule.

You probably have a skill or talent that could be turned into a side hustle. For example, if you’re really good at knitting you could create and sell scarves and sweaters Etsy.

Hundreds of people have made good money selling stuff on eBay and Amazon. This could be your own stuff or things you find at yard sales. Or you could serve as a retailer and sell other company’s products on eBay or Amazon.

Smart people negotiate with their lenders

Do you just assume the interest rates on your debts and other bills are fixed for all time? Are you carrying debts with interest rates that are so high you feel you’ll never be able to get them paid off?

Smart people have learned that interest rates, like many things in life, can be negotiated. This may surprise you but negotiating lower interest rates has become fairly commonplace – especially in the case of credit card interest rates. If you have cards with interest rates of 17% or higher contact the issuers, explain why those interest rates are such a burden and you may be able to negotiate a better deal.

There are other types of bills where you can probably negotiate them down or even eliminate them including your Internet service, satellite or cable TV, medical bills and car insurance premiums.

Smart people use “found” money to pay down their debt

Almost everyone is the recipient of “found” money sometime throughout the year. This could be a bonus, an inheritance, an annual raise or a nice income tax refund. But smart people don’t use their “found money” to do something extravagant. They use it towards paying off their debt. If you are fortunate enough to get some “found” money and are using the snowball method, you could use it to pay off the debt with the smallest balance. Otherwise, just use it to pay off a big chunk of some debt.

Smart people consider balance transfers

If smart people find they’re unable to negotiate lower interest rates on their credit card debts, they’ll look into transferring the balances on their high interest credit cards to a new one with a lower interest rate. There are now cards that offer 0% interest on balance transfers and purchases for as many as 18 or even 21 months. If you could qualify for one of these cards and get your balance paid off during your interest-free period you’d both get your debt paid down faster and save money on interest.

Smart people quit their expensive habits

Do you have an expensive habit such as smoking, drinking or gambling? Smart people evaluate their habits and if they find they do have an expensive one they simply quit. There’s nothing about alcohol or smoking that will help you achieve your goal of becoming debt-free.

Maybe you have a habit which isn’t quite as incendiary such as eating lunches at restaurants during the work week, those aforementioned drive-through coffees or a lot of fast food meals. If this is the case, your best strategy might be to just cut down on them over a period of time with the goal of eventually eliminating them entirely and replacing them with a less expensive habit(s).

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