One of the best things you can do for your finances is to pay down your debt. Paying down your debt is about more than managing your credit cards better. It is about actively seeking to get out of debt faster. If you just stick with paying the minimum, you will be unlikely to pay off your debt very quickly — and you will pay a lot more than you actually borrowed. This can be a serious problem if you are trying to keep more of your money for you. In order to pay off your debt more quickly, it is a good idea to boost your monthly debt payment.
Finding the Money to Boost Your Payment
The first thing you have to do is figure out where the money for this debt boost will come from. This means being realistic about what you can do. There are two main options when it comes to finding money in your budget to boost your debt payment:
- Reduce your spending.
- Increase your cash inflow.
These are very basic actions that can result in having more money to help you with your debt reduction. How you go about it depends largely on your own personal finance style, and on your current situation.
Reducing Your Spending
With this method, you cut back on your expenses, and then apply the money you are saving toward your debt. If you are already cutting close in your monthly finances, reducing your spending might entail a number of sacrifices. Look at your budget with an toward what can be trimmed. Eat out less, cancel subscriptions and look for ways to save money on utilities. This can be one way to find extra money. The downside to reducing your spending, though, is that it often feels like a sacrifice. It you don’t have a lot of room to cut, it can be even more discouraging, since it won’t seem as though you are making headway.
Increasing Your Cash Inflows
Another approach is to increase the amount of money flowing into your personal economy. You can do this by getting a part time job, or by looking for other ways of earning money. Some people start a side business or web site with the intention of using the proceeds to pay of debt. Creating a supplemental income stream in this way can have the added benefit of continuing to provide cash flow even after you are done paying off your debt. However, it can take time to set up an alternative income stream, and if you want faster results, a part time job might be the way to go.
The main downside to looking for ways to increase your income is that it almost always require the investment of time. Many people begin to feel worn down and tired, and miss spending time with their families. It is important to consider whether or not you are willing to deal with this.
Combining the Two
Many people prefer to combine the two methods. By cutting expenses, and by finding another source of income at the same time, it becomes possible to speed things up considerably. This reduces the amount of time spent sacrificing to pay the debt down, and leads you to a feeling of freedom quicker. Once the debt is paid of, you can go back to “normal” life. And, of course, it is important to use your credit cards wisely so that you don’t get into this situation again.