Which debts are not due to be paid first?
4. Prepare for next year
You may have some big items to save for in 2025. January is a good time to acknowledge your needs throughout the year and withdraw a portion of your income each month to cover these expenses. If you allocate $100 a month to your travel fund, for example, you’ll have $1,200 ready for an end-of-year trip. Add another $50 for birthdays, and you have $600 for gifts. While this may seem like trying to find extra money to cover these expenses, you will be spending the money anyway. By setting aside some money each month to cover these irregular expenses, you’re spending cash and not using your credit cards, as most people normally do.
Some people add an emergency fund to their financial goals, along with paying off their debt. Saving is The trick to becoming debt-free Which most people forget. Without an emergency fund, if you’re suddenly faced with an unexpected bill, you have cash to pay for it — instead of wiping what you just paid off your bills. Start small, saving $25 a month; It will save you $300 by the end of the year.
Whatever you decide, automate everything – on payday, you can arrange payments for all your debts, bills and savings accounts. This way, your financial priorities get paid first. It also makes it easier for you to track how well you’re sticking to your budget each month and whether you need to make adjustments.
5. Get more income in 2025
Resolve to earn more money this year – with the goal of paying that extra income toward your debt. You can go the traditional route, moonlighting at work, getting a second job at a nearby coffee shop, or getting freelance jobs in your area of expertise.
Or you could try the unconventional route, like selling used clothes on Marketplace, Depop, eBay, or Poshmark, spending a few hours as an Uber or Lyft driver, or petting dogs through Rover. You can also make your park available on Sniffspot for people who need a space to exercise their dog in a private dog park. There are many apps that can help you earn some extra cash for your services — money that can go directly toward debt payments.
6. Follow a cash-only diet
Get rid of your credit card in 2025. If you’re paying down your debt aggressively, you won’t want to add more to the balance you’re reducing. Once the debt is cleared, close the account. Instead of tapping away, keep your credit cards at home, remove your cards from Apple or Goggle Wallet, and delete these cards from your online accounts.
Some people choose a cash-only diet, withdrawing enough to cover groceries, transportation, and other costs specified in their monthly budget. This forces them to ration their resources and use only what they can afford. use Envelope or cash stuffing system To track the purpose of the funds; When it’s over, stop spending.
7. Remember why
A few months into your no-spend challenge or after a few weeks of working overtime, you may wonder why you took those extra measures. Keep your “why” at the forefront of your mind. Some people do this using a vision board, where they show their credit card balances at $0 or their emergency fund at the first $1,000 of their savings. Others leave a note in their wallets or on their smartphone lock screens to remind themselves of the dreams they are working toward. Having these images in sight keeps you motivated as you move forward each month. Finding ways to motivate yourself when paying off debt is key to sticking to your savings plan and putting extra money toward paying down debt rather than splurging.
What can a ‘bounce’ reveal about your spending?
Eliminate debt quickly to be debt free
The new year is a great time for change, to turn over a new leaf in your finances – and to aspire to get out of debt quickly. From creating a budget and negotiating lower interest rates on your loans to setting goals for saving and earning more money, there are many powerful debt payoff strategies you can take advantage of. But if you feel overwhelmed by any of these steps, one of our credit counselors will be happy to help you. They will review your finances, provide guidance on your budget and debt repayment strategies, or build a debt repayment plan with you to help you achieve your goals in 2025. Talking to a credit counselor is free, confidential, and judgment-free. Get help as soon as you think you need it – or even if you think you can get it on your own. Your future self will thank you.
Source link
