Ways to Pay Off Your Debt so You Can Afford to Move Out
More and more young people are living at home to save money. This is a smart move, especially if you’re struggling to pay back common debts like credit card or student loan debt. A recent study from the Pew Research Center shows that 33% of 25-10-year-olds live with their parents. This is the highest this number has ever been, and it shows just how expensive housing costs nowadays.
However, there comes a time in every young person’s life when it’s time to get out on your own. If you’re on the road to moving out, you’re probably looking for ways to pay off your debt so you can afford to move out. In this guide, we’ll list the most effective ways to pay off your debt quickly so you’ll be on your own in no time.
1. Pay More Than the Minimum
The first and most effective way to get out of debt faster is to simply pay more than the minimum payment on your debts. It’s easy to fall into complacency by only paying the minimum, but you might not be paying down more than the interest when you do this.
If you want to get out from under your debt so you can move out, you need a more aggressive approach. Since you’re living at home, you’re likely saving big on housing costs. Put all of this extra savings towards your debt payments to see massive improvements.
2. Use the Snowball Method
The debt snowball method was developed by Dave Ramsey, and it’s a highly effective way to tackle your debt without getting overwhelmed. Using this method, you start by listing all of your debts from smallest to largest.
Once you know all of your debts, you start aggressively paying the smallest balance first. Continue making minimum payments on your larger loans, but really focus on that small balance. Once you’ve paid off your smallest balance, move to the next smallest balance, and so on. Do you see how this starts to “snowball” over time?
You’ll be motivated by your achievements every time you pay off a debt, no matter how small. It’s this motivation that makes the snowball method so effective.
3. Choose a Side Hustle
Side hustles are on the rise today, and with good reason. The average pay isn’t rising nearly as quickly as the costs of living in many places, so young people are looking for new ways to fill in the gaps in their income.
Luckily, thanks to the internet, it’s never been easier to make money on your own time. Even if you can’t pick up an extra part-time job, odds are you can find a way to make money online. You can sell a craft, deliver food on Uber Eats, or even work as a freelancer selling your skills online. Putting this side hustle money towards your debt will yield fast results.
4. Negotiate Your Bills
Are you drowning under too many expensive expenses? Did you know you don’t have to accept these bills for what they are? It’s true. If you’ve been a responsible consumer and you’ve paid your debts and bills on time, you have room for negotiation.
Talk to your credit card company about lowing your interest rates. If you’ve always made payments on time and if you’ve improved your credit score since you first applied, you’re in a good position to get a lower rate.
The same goes for your bills. By calling your cable company, for instance, you can likely negotiate a lower rate, especially if they have any specials going on. You won’t know if you don’t ask, so why pass up free money you could put towards your debt?
5. Do a No Spend Challenge
Do you pay close attention to the small things you spend money on every day? If you’re like most consumers, you probably don’t. Those small coffee runs and lunches out add up quickly.
Challenge yourself to a “no spend” month. That means that throughout the month, you won’t spend any more than your allotted budget. You’ll pack lunches for work or school, you’ll bring coffee from home, and you’ll find free activities on the weekend. If a month sounds too intimidating, just start with a week.
Not only can you put these extra savings towards your debts, but you’ll also have a clearer picture of the spending you do every month. You might learn about some unhealthy money habits that you can change for the future.
Working Towards Moving Out
Are you looking for ways to pay off your debt so you can move out? This list is a great place to start. As long as you have a debt payoff plan that works with your budget, you can be in your new place in no time.
From side hustles to no spend challenges, it’s all about being smarter with the money you have. While the costs of housing are on the rise, you can still live a cheap lifestyle without any compromises. Once you’ve paid off your debt, you can use this money you’ve saved for a down payment on a home or for your security deposit if you plan to rent. The possibilities are endless.