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Are you in debt up to your eyeballs and struggling to get out?
Well that makes you and most American adults. But just because it’s normal to be in debt doesn’t mean you should stay there.
Main reason being…being in debt SUCKS.
When you are in debt, you are unable to have true freedom.
You wonder how you’re going to make it from month to month. There’s always that constant weight of bills that are soon to be due, keeping you from enjoying financial peace and liberation.
In addition, you can’t invest your money into places that can make it grow, which is important to think about when planning for your future and retirement.
Debt is like a constant reminder of things that you can’t do with your money, and it’s the reason most live from paycheck to paycheck. And that’s no fun!
But there’s good news…
You do not have to be stuck in debt forever.
Once you make up your mind that you want to be done with debt for good it is possible to do so. In fact, the most important step with eliminating debt is coming to the decision that you are ready to release its hold of you. From that realization, making your plan of action–and sticking to it, will be key factors to reaching your goals.
No. This won’t be a walk in the part– but nothing good in life ever does come easy, right?
I know that’s not what you want to hear, but paying debt will force you to take a good look at yourself and reassess your spending habits. It will take work and perseverance.
You can’t spend the same and just expect the debt to disappear. But after all of your effort pays off the reward is so worth it and longstanding.
If you won’t to know how to pay off debt then keep reading. In this article, I’m going to lay out 7 simple, yet effective steps that can help you kick debt in the butt — and sooner rather than latter.
1. STOP CREATING MORE DEBT
The most important step is to stop while you’re ahead. Don’t make things harder on yourself by continuing to use your credit cards. When I started my debt free journey I had to stop that urge I felt to swipe or insert my rewards cards at every chance that I could get.
At first I would spend it on little things here and there like a small cup of coffee, chips or candy from the vending machine, thinking that these small things won’t hurt, and plus their giving me rewards, — right? Sounds familiar?
On a side note, I do believe you can take advantage of rewards points and it’s a great way to earn some cash back, you just have to know yourself and budget before getting entangled in the rewards programs (avoid my mistake!)
I didn’t budget, so eventually those smaller purchases on my credit card turned bigger and bigger as I got more comfortable swiping, to the point I struggled to keep up with paying the full balance off every month.
That’s when my dear friend named interest came to pay a visit, making the rewards I had gathered all in vain, since I’d be paying back the balance and interest. It’s important to stop the habit of overspending before it even begins so you won’t have a larger mountain to climb.
Trust me. I’ve been there and done that. It ain’t worth it!
No debt, whether it be your favorite Starbucks drink or that nice fancy couch to adorn you living area, is worth jeopardizing your financial independence.
Until you gain better control of your money habits and pay off all your debts you need to place an indefinite hold on all forms of credit card spending. And while you’re at it, don’t apply for anymore loans of any kind.
The more credit you open the more tempting it will be to use, and the harder it will be to pay it all off.
Debts you should avoid opening during your debt free journey include:
- Credit cards
- Car loans
- Store credit
- Payday loans
- Mortgage
- Money borrowed
Basically anything you have to pay back should be absolutely avoided if you are serious about wiping away debt.
2. START TRACKING YOUR MONEY
See where all of your money is going by keeping tally of all of your bills. Begin by making a list of all of your monthly expenses and the amount due each month.
In my opinion it’s best to do this on a sheet of paper versus only typing them out. I like to use notebooks and my monthly bill tracker template. There are actually studies that prove writing things down helps your brain to retain the information longer. I’m not well versed on the Scientific lingo behind it, but you can read the article over at forbes.
Aside from writing your bills down on paper, apps are also resourceful tools that shouldn’t be overlooked. Consider free apps such as mint, which is what I like to use to keep a watch of all my various accounts and monthly expenses.
The bottom line is…do what works best for you when it comes to tracking, so you won’t overwhelm yourself trying to manage all these different systems.
Whichever method, always make sure to monitor your money habits because it will show you where you can make improvements.
Related: 4 Simple ways to track your money
3. MAKE BALANCE TRANSFERS
One thing that really helped me to pay off my debt was taking advantage of balance transfers. By this I mean if I had a huge balance on a card that had a high interest rate (and boy oh boy were there many!), I transferred that balance to a credit card that offered 0% interest for the first 12-18 months for balance transfers.
But be sure to pay off that balance you transferred before the intro balance transfer rate expires, because if not the transfer would have all been in vain, leaving you to still have to pay those monstrous interest rates.
TIP: You can contact your card’s company to see if they offer this. Most importantly, make sure a balance transfer is worth it for your situation. Sometimes the transfer fee cancels out any of the potential savings. So first do your homework and calculations.
4. REDUCE SPENDING
Remember when I said that paying debt will make you take a good look at yourself? I’m not lying. When paying off debt you will start to realize what’s truly important in life.
You’ll learn that material things will NOT make you happy.
Because who wants loads of stuff, but no time to enjoy any of it? I know I didn’t. To me that’s not really living.
To get your debts down you will need to reduce your spending so more of your money can go towards your freedom and investments, that in the long run will enhance your life.
Purchasing more products will only make things go slower and extend the grueling debt payment process even longer.
When you find ways to reduce spending you discover how much you actually waste your money on things you don’t even need, or on things you rarely use.
I remember cleaning out my closet one month, just shaking my head at myself, as I pulled out brand new clothes that I hadn’t worn — had the tags on them and everything. I wondered what I was thinking when I had made those purchases, (it was evident I wasn’t thinking,– but we live and we learn).
5. DO THE SNOWBALL METHOD
I’ve adapted this method for paying off my credit cards and noticed faster results when I did so.
I first read about it from Dave Ramsey; just in case you don’t know who he is I highly recommend his The Total Money Makeover book, it’s a game changer for sure! I read it frequently to keep myself encouraged and focused. It will open your eyes and shift your perspective about your money and finances.
The snowball method of paying off debt is highly effective. The psychological effects of seeing your small debts being paid off fast, then rolling over that freed up amount to the next smaller debt, proves to make you more excited to see your debt elimination progress continue. It motivates you to keep it going.
Sometimes we can get discouraged when we see all of our hard word take so long. So tackling the smaller debts, and seeing more wins, shows us that–hey this thing is actually working! Just keep pushing and eventually you’ll get there.
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6. LOOK FOR WAYS TO INCREASE YOUR INCOME
As much as I hate to admit it, money doesn’t grow on trees (how I wish it did!)
If you are only making just enough money to cover your monthly bills, and little to nothing extra to pay off debt, it maybe wise to look into another career — I know this takes time, and sometimes education is required, so looking into a temporary part time job to help speed along your debt payments would likely be a more convenient option.
My own debt journey started somewhat five or six years ago, but it didn’t make great improvement until after I found a higher paying job that I could start having excess money to hammer away at my debt more.
Don’t be dismayed though, you don’t have to be making six figures to do this. I was making about 34k, but I did live frugal — (and had no children at the time), so I was able to put much more money towards my balances.
Before having my twins I had a pretty good amount of paycheck left over. After paying the minimum of my bills I was able to dish over an additional $1,000 per month on my credit card debt, with the help of my husbands income it increased to an additional $2,000.
Working two jobs may not sound like a thrill, but if it can get you out of debt in two years versus ten…I’d say it’s worth it.
7. STAY MOTIVATED
Know at the end of the day mindset is everything. If you believe you can do something you will find a way to accomplish it. I know it might sound corny or even cliche, but that’s the down right truth.
There will be times during your journey to become debt free that you may want to give up. I had times where the process was going slow and I didn’t know if I’d ever reach the light at the end of the tunnel. But guess what, I eventually did, but it took me being persistent and never giving up.
You have to prepare your mind to stay focused and remain upbeat. Even if there are some setbacks remind yourself you can get back on course. Know eventually you will reach your goal mark and kick debts butt.
With debt, you have to be aggressive!
Will it be easy? No! Will it be worth it? Heck yes!
Debt may take some time to get out of, but once your out of it, there’s no greater feeling. Take it from me, that’s how I felt when I paid off 26k of credit card debt after struggling to do so for over six years.
Once I made that last payment…no feeling can describe that.
Just know, you can do it too!
You can succeed!
Let no one– not even yourself– tell you any different.
Read Also: How I paid off all of my credit card debt in 7 months
I want to hear from you guys! Share below in the comment section some of the the ways that you are knocking out debt.
Hi, I’m Shaniqua! I paid off $26,000 of consumer debt and am on the path to pay off all my student loan debt. I’m a future full time blogger who loves to write about ways you can get out of debt fast, save money, and create more income. I’m a wife and mom, and I created debt smashing to share my own debt journey and to empower others to go for their dreams. I’m passionate about helping others to succeed with their personal finances and overall life.
This is a great post! I’ve been looking for ways to pay off debt. It’s challenging being a mom and wife. I feel more motivated and know I will be deft free.