Credit is an essential financial tool that allows you to pay for expenses over time rather than all at once. Poor financial planning, however, can send leave you drowning in debt. If you don't pay your credit bills, you'll accumulate debt. According to Business Insider, the average American family has $6,500 of debt. Whether you owe more or less, though, you can get out of debt quickly by following some basic steps.
Eating out is downright expensive. According to The Simple Dollar, the average person spends $232 per month at restaurants. While you can treat yourself to an occasional meal from your favorite restaurant, you shouldn't make this a habit. Eating at home will save you money that you can use to pay off your bills and get out debt. Furthermore, home-cooked meals are typically better for your health than restaurant-prepared meals, so you may experience fewer doctor visits.
Whether it's a bill for a credit card or utility service, pay all your bills on time. It's not uncommon for companies to charge $20 to $30 for late payments. Assuming you miss the due date for multiple bills, you can easily spend hundreds of dollars on late fees each year. And to make matters worse, credit card companies may raise your interest rate by up to 30 percent if you miss a payment. If you have trouble remembering due dates, set a reminder on your phone to notify you a few days before your bills are due.
Do you really need the premium cable bundle with hundreds of TV channels that you rarely or ever watch? Recurring services like cable TV, Netflix and magazine subscriptions can take a toll on your finances. Each month, the cost of these services is automatically deducted from your bank account or credit card, regardless of whether you use the service. So, cancel any recurring service that you don't need.
Receiving a half-dozen or more credit card bills in the mail each month can be daunting. As a result, some consumers either avoid paying them altogether or pay equal amounts to all their credit cards. You'll get out of debt more quickly, however, by paying off the credit card with the highest interest rate first. Credit card interest rates can vary from 10 percent to 30 percent. By paying off the card with the highest rate, you'll spend less money on interest.
Getting out of debt requires two things: reducing your expenses and increasing your income. For the latter, consider working overtime at your current job. In the United States, the Fair Labor Standards Act (FLSA) requires employers to pay any employee who works more than 40 hours per week a rate of at least 150 percent of his or her regular pay. If your job pays you $20 an hour, for example, you'll earn at least $30 an hour when working overtime.
If working overtime isn't an option -- some employers prohibit employees from working more than 40 hours per week -- consider getting a second job. Millions of Americans work multiple jobs. With a second job, you'll have an additional stream of revenue to bolster your bank account and help you get out of debt. Search on Craigslist for job opportunities in your area. If you have a reliable vehicle and a clean driving record, you can also become a driver for a ride-hailing service like Uber or Lyft.
People approach reaching this milestone age in different ways. Some wholeheartedly embrace being 40, and others may feel stressed or even sad. Regardless of your personal feeling about the age itself, this is a critical time in your life when you need to focus on your personal finances. Take stock of your current situation, and use some of these tips to improve your finances going forward.
You'll struggle to get out of debt if you don't know what exactly you purchase. This is why it's essential to track your monthly expenses. From food and gas to clothes and utilities, keep track of every dollar you spend each month. At the end of the month, review these expenses to see if you can reduce or eliminate any of them. If you spend $400 on clothes per month, for instance, you can probably cut this expense in half at least.
Like quicksand, debt leaves you feeling trapped and hopeless. Even if you pay the minimum amount for your credit bills each month, you may fail to make any noticeable gains towards achieving financial security. To get out of debt quickly, follow the steps described here.