If you have ever experienced the huge weight that comes from being in debt, than you understand that you would do almost anything to get out of debt.
So I have thought of three possible ways to get out of debt, please keep in mind these are really only going to fit my situation. It’s my hope that it helps you in some way to get out of debt, but it is in no way a suggestion on what you should do.
Many of my credit cards have high interest, one as high as 24%. I know I could find a loan for much less interest than that. Lending Tree for instance offers a wide variety of loans that I could apply for to put all of my debt in one place and have one payment.
Also I have received several offers for this type of loan, that would save me hundreds if not thousands over the course of the loans.
What I like about this method of paying off my debt is two main things. First, that it put’s all of my debt in one place rather than all over the place. Second, it lowers my interest and would save me a ton of money.
What I don’t like is that, this method doesn’t really get rid of my debt. Sure it may save money, and may even help me pay down the debt quicker but, it doesn’t get rid of the debt.
Not only that but some of the best debt consolidation loans actually penalize you for paying the loan off early. So, if I did work at it harder to get the loan paid off I may be stuck in paying the payment for the duration of the loan. Not exactly a good way to get the debt down, more of moving the debt from one place to another.
If you look at my income reports, you’ll clearly see that I’m doing a lot of different things to make extra money.
If I were to truly buckle down focus on getting freelance clients, on actually getting my real estate license, on driving for lyft more often, and on finally monetizing the site. Then, I could possibly have the extra income to pay off the credit cards by the end of the year.
What I like with this idea is that it is completely up to me to do. At the end of it if I don’t succeed I have no one to blame but myself. I also like that these side hustles become more of a necessary and less of a hobby for me.
It would be nice to simply focus on these things and kind of push the rest of my life aside. Not entirely obviously but I could stand to watch less TV, to get more reading, and writing done. To exercise more, and most important to work on my side hustles the way they should be worked on.
What I don’t like here is that this would take time from other things. I have certain shows I like watching, I have gone weeks and even months without watching them before, with no negative effect. In fact most things that take too much time away from my side hustles I could get rid of completely and it would be to my benefit.
Also, my wife already thinks I spend a lot of time working on the side hustles. Though she is now very supportive in my endeavors, it does frustrate her that I spend time on other things rather than spending time with her.
When I turned 18 I did possibly the smartest thing I’ve ever done. I opened up a 401k through my employer and put in the minimum amount that is required for them to match.
This year is my 10th year with the company and 9th since I opened the 401k. After all these years the amount in there is enough to pay off the credit cards completely.
What I like about doing this is that it takes care of the debt all at once. I don’t have to continue to work hard (though I’m not sure at this point I would ever stop). It will save somewhere between 500 and 1500 dollars on interest, depending on how long it would have taken me to pay off the cards. And, it gets this massive weight off my shoulders quickly.
What I don’t like is that I would have to pay a penalty on the money, not to mention taxes. I would also be canceling out my debt and really be sacrificing years of savings to get there, not to mention the compound interest that I would miss out by removing it so early in life.
The best thing about personal finance is that it is “personal”. If I do any of these three options I will not be the first, nor the last.
All three options are right, and all three options are wrong. I can look at all of them and find the benefit as well as the draw back to them.
The good thing is I don’t have to decide right now, yes I’m deep in debt and want to get out. I cannot wait for this burden to be gone.
But when my debt is gone it won’t be the end of the journey, it will just be me becoming the best “future me” in the moment. As we all want to be.
Which option would you pick? Are there other options I didn’t think of? What are some of your pro’s and con’s of these ideas? Let me know in the comments.
Image courtesy of adamr at FreeDigitalPhotos.net