If you’re an average American, you’re in $90,000 of debt.
Here in this article, we will share some ways to chip away at your debt. The most important way is to develop healthy financial habits. Some habits like, spending within your means, not exceeding your credit limit, not relying on too many credit cards, and not eating out when you can eat at home are definitely going to help you with your debt.
By developing healthy financial habits, you can use more comprehensive debt repayment strategies to refinance your debt. If you’re eligible for a debt consolidation program offered by a counseling agency, for instance, a certified Credit Counsellor may negotiate with your creditors on your behalf to consolidate two or more of your unsecured debt into a monthly payment that you pay each month at the decided interest rate.
The aim is to achieve financial freedom,
Here are three smart ways to pay off your debt.
#1 Understanding the Financial Goals
If you want complete freedom from debt, the first step is to recognize your financial goals.
What are your financial goals and do they depend on your situation?
For example, you are in your thirties and you want to pay off your credit card, medical bills, personal loans, and other unsecured debt. Your situation is not like a twenty-three-year-old right out of college whose primary concern is to pay off their student loans while still having enough money to make rent.
Once you understand your financial condition, you can identify financial goals, like where you want yourself to be standing in 5, 10, and 20 years.
#2 Adapting Healthier Financial Habits
In order to reach your financial goals, you need to change your financial habits. You should know where and when to spend money.
Developing healthy financial habits means changing your unconscious behavior with money.
The best way to do this is to change your behavior with money in realistic ways until your healthy behaviors become automatic.
It’s a fact that trying to change your behavior with money right away is a recipe for failure. You’re setting the bar too high if you are trying to stop using credit entirely. A more practical strategy would be to reduce the amount of credit you use each month gradually.
Our habits are deeply implanted within us, and it’s easier to wean off them slowly without any hurry.
Think about it: It is easier for people to really eliminate processed sugar from their diet immediately? Sure, it’s possible, but it isn’t very certain. The simple and effective way for someone to eliminate processed sugar from their diet is to slowly reduce the intake day by day.
In the case of cultivating healthier habits, the tortoise wins the race.
#3 Choose the right Debt Repayment Strategy that Works for You
Another way is that you can use other debt payment strategies that streamline the debt repayment process.
These strategies include enrolling in a debt repayment program with a non-profit credit counseling agency or taking out debt consolidation loans. Both streamline the debt repayment process.
Bottom Line
You can facilitate the process of paying off your debt, by identifying your financial goals and smartly combining healthy financial habits with the right debt repayment strategy. so that one day—perhaps not too far away—you’ll be finally debt-free.