Struggling with debt can feel overwhelming, but you may already have the tools you need to tackle it head-on.
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“Achieving financial well-being involves more than just managing debt,” said Constance Craig-Mason, CEO of Concierge Financial Advisory. “It’s about fostering a healthy relationship with your finances and making informed decisions that align with your life goals.”
Here are the best ways to use what you already have to repay debt.
Start a Side Hustle
Leveraging your talents by starting a side hustle generates the additional income you’ll need to repay debt faster while getting you closer to achieving financial freedom.
Craig-Mason recommended using Airtasker. It is a community platform that connects people who want to outsource tasks like painting, decorating and carpentry with people who are looking to earn money.
“Identify talents or hobbies that can generate income,” said Constance Craig-Mason, CEO of Concierge Financial Advisory. “For example, one individual cleared over $25,000 in debt by performing various tasks through an online marketplace.”
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Use the Debt Snowball Method
List your debts from the smallest to the largest balance. Focus on paying off the smallest debt first while making minimum payments on others. Once the smallest debt is cleared, move to the next, creating a snowball effect that builds momentum.
“By systematically paying off the smallest debts first, you will subsequently increase your financial confidence,” Craig-Mason said. “This method provides clear milestones, makes the debt repayment journey more manageable and less overwhelming, and reduces financial stress.”
Redirect Hidden Costs
Examine your monthly expenses to identify areas where you can cut costs, such as subscriptions or dining out.
“Redirect these savings toward debt repayment,” Craig-Mason said. “The savings can be earmarked to start or increase your emergency savings account.”
Craig-Mason also suggested bartering skills or goods to save money. Doing so could cultivate mindful spending and savings habits, greater financial control, and the ability to absorb financial shocks.
Resist Impulse Purchases
According to a survey commissioned by Slickdeal, an online shopping platform, the average consumer makes $151 per month in impulse buys. While that dollar amount has decreased from a high of $314 per month in 2022, impulse purchases can add up.
“Learning what causes you to buy on impulse and coming up with ways to dodge these temptations can help you save so that you can put those dollars to reducing your debt instead,” said Andrea Woroch, a consumer finance expert, writer, and author.
Woroch explained, “If you can resist a sale, dodge temptations by unsubscribing from emails, opting out of text alerts, turning of push notifications in retail apps and unfollowing brands on social media.”
Create an Emergency Fund
Building an emergency fund will help pay for unexpected expenses or emergencies. Otherwise, it will be tempting to use a high interest rate credit card as a bridge during a tough financial time.
Woroch recommended opening a high-yield online savings account because it earns more back in interest.
“For instance, Bread Savings offers a annual percentage yield, which is much higher than the average 0.46% APY offered by traditional savings accounts,” Woroch said. “This way, your savings is working for you.”
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This article originally appeared on GOBankingRates.com: 5 Best Ways To Use What You Already Have To Repay Debt
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