The first step to getting out of debt fast is to stop borrowing money. Next, create a realistic budget, and organize your debt. Stay away from debt in the future by establishing an emergency fund.
- Stop borrowing money
Make a decision to stop borrowing money to fund your lifestyle immediately. This helps you to focus on paying off your debts and makes it easier to come up with a workable plan that you can stick to.
- Create a realistic budget
Come up with a realistic budget, and stick to it. Trim your unnecessary expenses, such as eating out often or a Netflix subscription. Find a way to earn more money either by getting a second job or by putting in more hours at your current job.
- Organize your debt
Come up with a plan to pay off your debt quickly by making a list of all your debts. Start from the smallest to the largest. This method is effective because once you make the first payment, you get motivated to clear the rest. Alternatively, list your debts starting with the highest interest rates.
- Use excess cash to pay off your debt
Divert any excess or unexpected cash to paying your debt. This includes inheritance, a tax refund or any other source of unexpected cash.
- Establish an emergency fund
Stay out of debt in the future by establishing an emergency fund. This ensures that you don’t have to borrow money to take care of emergencies.