by Maurie Backman | April 15, 2020
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It can also make you wealthier.
They say money can't buy happiness, but that may not be entirely true. Money can buy financial security and peace of mind, which can certainly lend to a more positive outlook on life. And owing money on revolving debt such as credit cards certainly makes many of us less than cheerful.
In fact, 97% of people who carry debt feel they'd be happier if they didn't owe that money, according to a study by The Ascent. If that's how you feel, then it's time to tackle your existing debt rather than letting it hang over your head and mess with your well-being. Here's how.
Chances are, you have more than one source of debt. Maybe you have an auto loan, a personal loan, and a couple of credit cards with outstanding balances. If you're eager to shake that debt, figure out which one is costing you the most in interest and pay it off first. Chances are, it'll be a credit card. And if you have more than one card that's charging you a lot of interest, a balance transfer could be a good bet.
Once you figure out how to pay off your debt, you'll need money to make good on that plan. That's where budgeting comes in. Once you set up a budget, you'll have a better sense of how much you pay each month on your bills and other essentials, and you'll also be in a good position to cut back on unnecessary spending such as move tickets and restaurant meals. The money you free up month after month by being more mindful can be used to chip away at your various debts until they're gone.
Maybe you can free up only so much money on a monthly basis by living frugally. That's why it pays to look into a side hustle -- something you can do on top of your regular job to earn extra cash. That gig could be anything from driving for a rideshare company to babysitting, pet-sitting, tutoring, or doing work online. There are plenty of options to choose from. The key is to find something that works well with your schedule so you're able to keep at it.
One reason why so many people end up in debt is that they don't have any money set aside for unplanned bills. Once you manage to pay off your debt, you don't want to risk landing right back where you started. Having cash reserves in the bank can help. Ideally, your emergency fund should contain enough money to cover at least three months of essential living expenses. Although nobody expects you to amass that much money overnight, you should definitely aim to build up that much in savings over time.
You deserve to be happy in your daily life. If your debt is making you miserable, it's time to end that unhealthy cycle. Not only is paying off debt good for your wallet, but it can also improve the way you view yourself, and the way you view your life. And for that reason alone, it's worth making the effort.
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That’s one reason our experts rate this card as a top pick to help get control of your debt. It’ll allow you to pay 0% interest on both balance transfers and new purchases until late 2022, and you’ll pay no annual fee. Read The Ascent's full review for free and apply in just 2 minutes.
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