How do you erase your debt?

Let’s face it.  Being in debt isn’t fun.  Actually… it sucks!  No one enjoys creditors calling at all hours of the day or night.  Who wants to find new ways to juggle expenses just to make ends meet?  And the simple task of just paying the bills can take hours when there are tons of payments to stay on top of.

 

erase_debt.png

Believe it or not.  There is a way out.  You can get free of the overwhelming debt once and for all.  Here are a few tips that will get you back on track.

1.      Save some money – You always need to have a little bit of cash on hand in case of an emergency.  Before you begin to knock out your debt, keep all spending to a minimum including debt payments and save as much as you can, preferably $1000.  You don’t want to go back into debt simply because you didn’t have money stashed away for those inevitable emergencies.

2.      Quit borrowing money – Yes, this should go without saying but it is an important step.  You may need to cut up your credit cards.  It is probably a good idea to at least get them out of your wallet.  When I was in debt, my husband and I put our credit cards on ice.  We literally put them in a bowl of water and froze them!  No matter how you structure your discipline, make sure to stop using credit in any way.  It will defeat your efforts if you don’t stop the bleeding.

3.      Budget – I know! Everyone hates this word.  But adding up your income vs. your expenses is the best way to find money!  Review 30 days of spending in your bank account.  Find out where all of your money is going.  Then create a plan before the next month begins which details out where you spend your money.  If you don’t gain control in this way your money will find a home of its own.  For me, uncontrolled money is spent on unplanned dining out or clothing. 😊

4.      Use CASH! – Your grandma used to do it and she probably didn’t have any debt.  Take a play from her book and try to use cold hard cash for 30 days.  It doesn’t have to be forever.  Just try the idea and see how your spending changes.  You just might find that you don’t need to spend as much on certain things.  Then more money can go to towards your debt reduction efforts.

5.      Sell something – There could be tons of things around your home that are collecting dust or not serving you well. Give it another home by allowing someone else to buy it from you.  There are neighborhood sites, eBay, garage sales, etc. where you can sell items you no longer need or use.  Make it a game and see how much you can earn by selling things.

6.      Get a part-time job, do overtime, start a business – Think about how much extra time you have and put it to good use.  There are plenty of ways to use your gifts and talents to earn a little extra income.  Just $500 per month more might be the difference in paying off your debt in months rather than years.  Calculate the difference some extra money would make in your budget.  That just might be the extra incentive you need to finally get free of your debt.

No matter where you are in your journey, any one of the steps above can make a difference in your finances immediately. Don’t strive for perfection.  That is a goal no one can achieve.  Instead focus on progress.  Just one step towards your goals is progress in the right direction.

 

Need some help with your strategy? Set up a Debt-Free Strategy Session with me to get more clarity on your personal next steps or t. simply get unstuck.  Click here to set up a time.

Get Out of Debt - FAST!

It can be a challenge to navigate your way out of debt.  For the most part I subscribe to the snowball method of getting out of debt.  But sometimes knowing the right place to begin and understanding how to get out of debt the fastest way possible is a frustrating obstacle to overcome.  Check out a few tips I always give my clients who are looking to finally get free in a short amount of time.

leavedebt.jpg
  • Stop investing right now.  I know this seems impossible and may unwise to some but it really works for 2 reasons.  It gives you clear motivation for not remaining in debt for a long time.  You don’t want to be out of the market for long periods of time.  This also frees up some cash to put towards your debt without changing your budget.
  • Don’t give the government and interest-free loan.  So many people love getting tax refunds but what they don’t realize is that they could be using that money in their budget towards their debt every month.  Check out irs.gov and use the withholding calculator to determine your optimal exemptions so that you break even on your taxes (you don’t owe, and you don’t get a large refund).  Then make the necessary adjustments with payroll so your take-home pay is larger.  Finally, apply those extra funds toward your debt.  If you received a refund this year then put it to good use and apply it to your debt immediately.
  • Use cash.  People always ask me what I mean by this.  I mean use cold hard cash for purchases.  You will spend 12-15% less when using cash for your groceries, while dining out, and other general shopping.  Yes, it is partly psychological, but it works!
  • Use your skills.  This is a good time to go to work!  We all have gifts and talents that are not being used.  Take the time to figure out what you can do after work and on weekends to earn extra cash.  The more you make the faster your debt goes away.
  • Finally, use credit to your advantage.  If you have good credit and pay interest on your credit cards right now, you may be able to transfer balances to another card with a 0% introductory rate.  Check out creditkarma.com and they will show you cards that you could qualify for.

Getting out of debt isn’t easy but it is worth it.  Do all you can to get free as quickly as possible because then you have the freedom to do anything you want with your money!