5 Tips to Live Debt-Free in a Year

Being debt-free is an ambitious goal, and sometimes this becomes a priority. For most, this is a lengthy process, and it can take many years to reach this goal. Sometimes you need to speed things up, getting out of as much debt as possible in a limited time. If you wish to live debt-free in a year, you need the right strategies.

Though this is undoubtedly challenging, there are many tips that can help you reach your goal. Living debt-free relieves the mental stress of constantly paying off your debt. While not all debt is created equal, it’s good to be proactive. In this guide, here are 5 tips to live debt-free in a year.

1. Use Your Savings

While it’s important to have an emergency fund, don’t be afraid to use your savings to pay down your debts faster. You need to keep money aside just in case, but it doesn’t have to be your only focus. If you’re trying to live debt-free in a year, that might mean you shift your priority from saving to paying down debt.

Using your savings for debt repayment can actually save you money. Because you’ll stop accruing interest on larger balances, you’ll save yourself in the long run. This means you will have more funds to set aside for savings later. If you have a lot of money sitting in a savings account, consider if you can use some towards your debts.

2. Negotiate Your Interest Rate

Next, did you know you can negotiate your interest rate? It’s true, and you might be able to pay off your debt faster. Interest rates are always shifting and changing, so you might be able to refinance your debt, use a debt solution, or talk to your lender directly.

Though it can be intimidating, your lenders want to work with you. Their goal is to make money. If you can’t pay back your debt on time, they lose money. This means they’re usually willing to work with you to adjust to your financial situation. Working with a debt professional on your behalf can also help with negotiating interest rates.

3. Pay More Towards Your Debts

One of the most straightforward, direct ways to live debt-free in a year is to simply pay more towards your debts. For example, say you’re currently dedicating 10% of your pay towards your debt repayment. While this is a good start, you might be able to increase this percentage to 15% with a bit of shifting in your budget.

Most debts don’t require big monthly payments. Credit card debt, in particular, usually only requires a 2% payment of the balance each month. These low minimums could leave you paying less than you can afford. In reality, the less you pay each month, the more you’ll pay over time.

4. Do a Balance Transfer

Using a debt solution can help streamline your debt-free plans. Because many credit cards and personal loans have special intro periods, these are helpful if you have an ambitious goal for debt payoff. A balance transfer card is designed to wrap all of your payments into one, making it easier to manage your debt.

If you have multiple lines of credit, each with its own interest rates and payment dates, this is a lot to juggle. By rolling all of these into a single monthly payment, it’s easy to stay on track. Better yet, many of these balance transfer lines of credit have 0% interest for the first 12 months. Though your options will depend on your current credit rating, this is an efficient, powerful debt solution.

5. Try a Side Hustle

Last but not least, the best way to live debt-free is to make more and spend less. While you might be eligible for a raise at your current job, this isn’t your only option. A side hustle is an up-and-coming way to earn more with your time and your skills. No matter your experience, you can make money with the new gig economy.

What side hustles are out there? You can drive for a rideshare company, deliver food, or resell thrift store finds. This is an opportunity to use the time you have to earn extra cash. This is money you can dedicate specifically to debt payoff, getting you even closer to your goals.

Grow Closer to Live Debt-Free

Achieving a debt-free lifestyle is quite an accomplishment. While far from easy, there are many steps you can take to build your own repayment system. Everyone’s budget is different, and there is no one-size-fits-all. If you’re ready to make a difference in how much you owe, take these tips seriously.

Do you need help with your debt repayment? Debt Busters is here to help. With over 15 years of experience, we’ve helped Aussies of all backgrounds achieve their debt-free goals. Contact our team today to get started on 1300 368 322. We’re here for you.

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