One of the things that people following the F.I.R.E plan (Financial Independence Retire Early) like to do is pay off their debt early. This can ensure that any money that they do receive in retirement is not going towards paying off debt. This can include paying off a mortgage too. Since a mortgage is one of the biggest expenses then you will have a lot more money to play with if you don’t have to include this in your budget. Paying off debt can give you peace of mind. Here are some easy that you can pay off debt fast.
Know Your Finances
Before you even begin tackling your debt you will need to know exactly what you are dealing with. Write down all of your debts, including the balance, interest rate and minimum payments. See if you can reduce your interest rate by swapping to an interest-free credit card or re-mortgaging, for example. Check your credit report to make sure it is correct. If you are having difficulties with your debt then reach out to a charity such as Step Change who can help you sort out your finances.
Create a Budget
Make a budget that you can stick to. You can create savings accounts online that you can then deposit money in each month so that you have your expenses covered. Don’t forget sinking funds for Christmas and Birthdays and make sure you have a fun pot too. It doesn’t need to be much but this way you will feel like you still have a bit of money to enjoy yourself and you will be less tempted to go back into debt.
Cut costs wherever possible. There are many ways that you can save money on everyday expenses. Stop buying lunch and coffee out and prepare your meals. Make ‘Fakeaways’ instead of having takeaways. Shop around to get the best deal on your groceries and look for coupon codes for online purchases. Reduce your phone bill by considering using a pay-as-you-go deal and buying your phone up-front.
Stop Using Credit
If you don’t want to get rid of your credit card then make sure it’s paid off each month. Don’t go into further debt to pay off your existing debt or be tempted to use credit to treat yourself. Make a commitment to not go back into debt.
Pay more than the minimum on your debt. If you are really serious about getting out of debt then pay as much as you can on your debt each month. By doing a budget earlier you will know exactly how much extra you can pay towards your debt. If you are paying off your mortgage early then make sure you are aware of any early repayment fees.
Increase Your Income
Think about ways that you can increase your income like starting a side-hustle, creating a business or asking for a raise at work. There are lots of things that you could do online to make extra money and put it towards your debt. Don’t forget to factor in tax expenses.