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Any amount of debt — whether it’s a couple hundred dollars or a couple thousand — can make you feel like you’re drowning. Not being able to pay it off and having it hover over you can seem like the rain cloud that never leaves you alone.
There are others like you: The average American household credit card debt is at $5,700. If it’s not credit cards, it could be something else. The average student loan borrower owes $32,731 with student loan debt totaling $1.52 trillion.
A lot of us are living with thousands of dollars in debt with the relentless feeling that it won’t ever go away. But there are steps you can take to pay off your debt — and to do it sooner than you expected.
5 ways to make cash to repay your debt
If you’re coasting by, it may seem like you could never pay off your debt. But making some big changes can reap massive rewards. Here are a few ways you can tackle your debt head-on.
1. Redo your budget
If you don’t have a budget, making one is a great first step. If you do have one, add in regular payments to your debt, even if it’s the minimum amount due. Making on-time payments is vital — especially if you haven’t been doing it so far.
Then look at where you can make changes to your budget. See if you can cut out anything that isn’t considered a “need.” Lower your dining out budget, or cut your cable bill and stream shows and movies instead.
After you’ve shifted money around, add all the extra cash you now have toward paying your debt. Instead of making only the minimum payments, start paying as much as you can. Slowly chunking away at it is better than ignoring it or only making minimum payments.
2. Ask for a raise
After you’ve made personal budget cuts, you may not have as much as you wanted to pay off debt. In that case, you’ll need to earn more money along with saving it.
One of the best ways to get more money is to earn more. If you’re happy at your job and believe your employer finds you valuable, approach your supervisor about a raise. Prove your worth by showcasing what you’ve done over the last six months or a year.
Do your homework before your meeting. Have a dollar figure or percentage increase in mind so you’re prepared to ask for an appropriate amount. This can vary depending on your job, responsibilities and how long you’ve been there. But being prepared before your meeting not only helps you prove your case, but gives your boss an idea of what you’re looking for money-wise.
Use your new cash to make major payments on your outstanding debt. If you didn’t get a raise, spend some time reviewing where you went wrong and how to get one the next time an opportunity comes up.
3. Find a job that pays more
If you don’t feel there’s any growth in your current position or that you wouldn’t be considered for a raise, it’s time to find a new job.
Staying in your industry is nice but if you don’t like it or you believe you can grow elsewhere, try shifting your focus. Find a job that pays not only more than what you make now, but has the potential for long-term growth. This allows you to grow in an industry and earn more money as you hone your skills.
4. Start a side hustle
Sometimes getting a new job takes a bit of time — or sometimes a long time. If you want to start making money while you wait for a raise or a new job to come along, embrace your side hustle.
Your side hustle is the hobby or job you do when you’re not at work. Some people sell goods online through an Etsy shop, some drive for Uber or Lyft. Your side hustle doesn’t have to pigeonhole you; you can do whatever you want. But you should be happy doing it while it also brings in extra cash.
Instead of using your side hustle money to pay for other things, put all the cash toward your outstanding debt. Start to make larger payment chunks every month instead of just the minimum. As your side hustle grows and earns you more money, use it to make bigger debt payments until all your debt is paid off.
5. Sell unneeded belongings
Whether it’s old designer clothes you no longer wear or your car, selling things can pocket you extra cash — either a little or a lot. If you have the chance to sell your car, you may be able to settle your old debt in full. This is only a good idea if you have the means to get around otherwise, like public transportation or car pool. If you need your car for work, this won’t work for you.
Instead, find other things that no longer spark joy to sell. If you have older collectibles that a relative passed down to you, see how much they’re worth. Books, phones and furniture can all net you a decent amount of money, if they’re worth it.
A little bit goes a long way, and selling your stuff can give you a big boost to pay down debt.
Why you may want to consider refinancing or consolidation
Debt can grow quickly when you’re dealing with massive interest payments. To combat this, you may want to think about refinancing or consolidating debt with a personal loan.
Debt consolidation is when you take out a new loan — typically a personal loan — to pay off old debts. You’ll then make payments on the new loan. One benefit of consolidation is that you can combine multiple debts into one with a lower interest rate. That helps you put more money toward your principal balance by lowering how much money goes toward interest each month.
Refinancing works similarly, except you’re only paying off one debt with a new loan. You may, for example, choose to refinance outstanding credit card debt with a high APR. That could help you escape high-interest debt, assuming you don’t charge up your credit card again.
If you can’t secure a loan with a lower interest payment, refinancing or consolidation may not be a viable option. If you still want to try this route, concentrate on boosting your credit score first. As your score goes up, your chances of qualifying for a low-interest loan go up as well.