Debt is an ever-present burden that will keep you from living out your dreams. If you are striving to build your wealth, getting rid of debt should be your top priority. Once you’ve eliminated debt, you can actually start investing to start the process of building long-term wealth. Here are four key steps to help you learn how to get rid of your unwanted debt:
1. Avoid Debt Schemes
Debt elimination schemes or scams are illegal and should be avoided at all costs. You may receive emails or come across websites claiming a company can help you get rid of debt very quickly for a small amount of money. But in truth, no one can eliminate all debt simply by paying a fee.
If a scheme seems too good to be true, it is. These companies typically create fraudulent legal documents based on a person’s loan, which have no legitimacy with their bank or lender.
The only way to really get rid of debt is by paying it down with consistent deposits over time.
2. Get a New/Second Job
Paying off debt may seem like a complex problem, but there’s a simple solution. To pay off debt, you probably need to start making more money (or reworking your budget.) And since budgeting is often a sore spot for people in debt, the fastest and most effective solution is usually to get a new job or an additional job.
Getting a new job at a higher salary or hourly wage will allow you to allocate more of your monthly budget toward paying off debt so you can get rid of that debt for good. If you aren’t able to find a higher-paying day job, don’t worry. There’s never been a better time for finding a flexible second job than in today’s gig economy.
So what are you waiting for? Become an Uber driver, start delivering groceries, walk dogs, rent out a room in your house—whatever it takes to start bringing in more money.
3. Reduce Unnecessary Purchases
When you’re motivated to pay off debt quickly, you’ll need to pair that new job or second job with another key element: reducing your unnecessary purchases.
And while it’s easy to justify a whole host of purchases as “necessary,” you’ll only be hurting yourself if you aren’t honest about which purchases you truly need. Is that morning coffee essential? No. Do you really need that new pair of jeans? Doubtful.
Get creative with your budgeting so you don’t have to feel like you’re going without. Invite friends over for a dinner party rather than eating out, or host a movie night rather than going to the theater.
4. Hire a Financial Advisor
Are you dealing with credit card debt, student debt, and debt in several other forms? If so, it’s wise to hire a financial advisor. An experienced professional will have the expertise needed to help you prioritize your debts and make an actionable plan of attack.
Yes, you will have to pay some money upfront to hire a financial advisor. But that advisor will enable you to pay off your debts more quickly and efficiently, cutting down on the interest you owe over time. You’ll likely end up saving money in the long run, meaning the cost of hiring an expert advisor will far outweigh the expense.
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