6 Tools That Can Help You Become Debt Free
Written by
J. Arky
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Close your eyes and just imagine it: Being debt free. For many people working today, that feels like an impossible dream to realize. Between having to take out loans for your education, getting a mortgage on a house and putting expenses on a credit card, debt can feel never ending.
Thankfully, there are some modern tools that can help you become debt free. This doesn’t mean you won’t slip into debt here and there along the way — it’s almost inevitable these days — but these methods can aid you in getting yourself out, managing any future debt and staying in the black going forward.
Here are the six tools that can help you become debt free.
Budgeting Apps
Our lives are connected to our smart devices. One of the reasons they are so adept and useful is that you can download apps to help you with anything, such as budget and expense tracking.
“Apps like Mint and YNAB (You Need A Budget) are great for tracking expenses and creating budgets. They help you see where your money goes and identify areas to cut back,” said Rhett Stubbendeck, the CEO and founder of Leverage.
“YNAB teaches you to prioritize every dollar you earn, a fundamental shift that can drastically reduce debt,” added Ben Klesinger, the co-founder and CEO of Reliant Insurance Group. “Mint helps you manage your budget, keep tabs on your bills and track your investments all in one place.”
Debt Snowball vs. Debt Avalanche
Two popular strategies for debt repayment are the snowball and avalanche.
“The debt snowball method involves paying off your smallest debts first, which can provide quick wins and momentum,” Klesinger said. “The debt avalanche method, on the other hand, focuses on paying off debts with the highest interest rates first, saving you more money in the long run.”
Automated Savings Plans
“Services like Digit and Qapital automatically save small amounts of money from your checking account to a savings account based on your spending habits,” Klesinger said. “This incremental approach helps build an emergency fund, which is crucial for avoiding new debt.”
Joe Camberato, the CEO of National Business Capital, suggested setting up this tool “so that a part of your income automatically goes toward your debt repayment. This way, you don’t have to rely on willpower alone to save money.”
Stubbendeck added, “Setting up automatic payments ensures you never miss a due date, avoiding late fees and improving your credit score. I always set up automatic payments for my bills to stay on top of due dates without stress.”
Credit Counseling
Credit counseling services provide personalized advice and debt management plans, according to Stubbendeck.
“I recommended a client to a reputable agency and they negotiated lower interest rates, creating a manageable payment plan,” Stubbendeck said.
“Seeking the help of a nonprofit credit counseling agency can be beneficial,” Klesinger said, adding that “organizations like the National Foundation for Credit Counseling offer programs to help you consolidate and manage your debt more effectively.”
Refinancing and Consolidation
Consolidating multiple debts into a single loan with a lower interest rate can simplify payments and reduce interest costs.
“I had a client who saved over $2,000 in interest by consolidating their credit card debts into a personal loan,” Stubbendeck said.
Klesinger added, “Refinancing high-interest debt, such as credit cards, into a lower-interest personal loan or consolidating multiple debts into one can simplify your payments and reduce interest costs.” He said companies like SoFi and LendingClub offer competitive rates.
Side Hustles
We are living in the gig economy and there is no shame in taking a side hustle to make a little extra money that you can use to pay off your debt.
“Earning extra income through side jobs can accelerate debt repayment,” Stubbendeck explained. “One client started freelance writing and used the additional income to pay off their student loans faster. I believe in leveraging side hustles to boost your financial situation.”
You can always quit once you reach your financial goals or use the side gig to increase your savings.
More From GOBankingRates
