Being in debt can stall or stop your dreams from becoming a reality. The following action steps, when followed and repeated, can help you pay off your debt and get you closer to the life you want to live.
- Face reality. Accept that you have a debt problem and that it is not going to go away on its own. Accept that it will take time, discipline, consistency, and patience to pay off the debt. If you don’t face and accept your present situation, then it is a waste of time to keep reading.
- Take inventory. Write down all of your accounts, the amounts you owe, the minimum payments, the interest rates, and the due dates.
- Create a plan. Having a plan of attack is essential. Start with the smallest amount you owe. Look up the amount of interest you are paying and add that to the minimum amount due each month. Pay this amount each time. Don’t adjust the payment down as the amount you owe decreases. By continuing to pay this amount each month, you will pay more to the balance than to interest. This will cause a snowball effect, paying off the debt faster. Once the amount is paid off, go to the next smallest amount of debt you owe and repeat the process.
- Budget your living expense for the month. Write down your monthly bills (other than the debts above). This will include groceries, living expenses (ex: mortgage, utilities, cell phone), insurance, etc. These are your minimum monthly expenses - the necessities needed to live your life. Set this amount aside each month.
- Jump start your debt reduction. We all have extra “stuff” that we don't need or use anymore. Gather these items up and sell them. For some a garage sale will do the trick, for others websites like Craigslist or eBay may be the best way to sell your unwanted or unneeded items. Take the proceeds from the sale of these items and pay them towards your smallest debt balance. If you raise enough to have money leftover, pay the remaining amount towards the next debt balance. Do this until you don’t have anything that you want to get rid or until all the debt is gone.
- 30-day evaluation. Every 30 days sit down, update your spreadsheets, and review your progress. This is key. By taking the time to review your progress, you will remind yourself what your working towards...zero debt!
Paying off debt takes discipline and dedication. Whatever you do, don’t stop working your plan. You are capable of paying your debt off and living debt free.
If you have questions about how to get out of debt or how to build a financial plan, please contact me. I am happy to help in any way. Email me at email@example.com.