Not many people like the idea of debt hanging over their shoulders.
Whether the debt is from student loans, poor financial decisions, or from medical treatments, living under the cloud of debt is stressful. It feels like you're drowning and the lifeguard is off-duty.
However, it can also be overwhelming to figure out how to pay off debt for good.
Here are some things to keep in mind when you decide that it’s time to beat your debt!
7 Ways to Pay Off Your Debt
1. List your debt from smallest to largest. Knowing exactly how much money you owe is eye opening. Listing your debt from smallest to largest will help you realize that somethings need to be done. Plus, knowing which debt you will knock out first is important. The point of paying off the smallest debt first is so that you get “small victories” that help motivate you to keep paying off debt faster.
2. Find a way to bring in extra cash. You are probably in debt because there is a cash flow problem happening. Your next step is to find a way to bring in extra cash. This may be picking up a second job or doing a side hustle to bring in extra income. Use the extra income to pay down the debt.
3. Do things yourself. You are going to need as much cash as possible to help you get out of debt. That means when things go badly, you need to do things yourself. Of course, there are times when an expert is needed, but for the most part, doing things yourself can help you save extra cash!
4. Find ways to stay motivated. I’m not going to lie, paying off debt can get exciting, but it also has its downside. Set little goals for your family to help you stay motivated. Every time you reach one of this mini goals, treat the family (cheaply). There are so many inexpensive things you can do in life. Remember that money won’t ever make you happy. Although, I know it’s nice to be able to do things with your family.
5. Get rid of the extra stuff in your life. Sell anything and everything you can. Don’t keep things around the house that are worth money. Selling your stuff is a great way to reduce the looming cloud.
6. Set a budget. The word budget isn't a bad word. It is simply setting limitations to help you live your life to the fullest, once the debt is paid off. It feels like you're missing out, but you aren't. You are simply living within your means for possibly the first time, and that can hurt, but it's totally worth it.
7. Use Cash. No one uses cash anymore. I hear you. I really do. Drastic measures need to be taken though to help you get out of debt. Use the envelope system. Look at the budget and figure out how much you can spend each month on groceries, gas, utilities, car payments, etc. Once you have the numbers, use envelopes to hold cash for things like groceries. Once the money is gone, it's gone. It make take a couple of weeks to figure out the system and change old habits, but again, it's worth it.
Beating your debt and getting rid of it for good is a lot of work.
New habits will start forming and when you pay off that last debt, you will experience freedom and be able to breathe again.
What tips do you have for someone trying to pay off their debt?