Paying off debt can make a huge difference in your life. Imagine the relief you’ll feel when you no longer have the stress of figuring out how to cover everything — and when you have the freedom to do the things you want to do with your money.
Paying off debt is a matter of four basic things: not taking on new debt, making paying off debt a priority, cutting spending, and making more money. Get on track with those four things, apply the debt snowball method, and you’ll be on your way to being debt free!
Not taking on new debt
Of the four, not taking on new debt is the most important. That may sound obvious, but it’s incredibly common for people who are working on paying off debt to go out and borrow more money. That’s because for many people, being in debt has become a habit.
I was no exception — I struggled a lot with covering things that kept coming up when I was first trying to figure out how to get out of debt. That’s because we get used to looking to debt as a solution when we need something. But you can break free of the debt myth. Even if not taking on new debt is the only thing you do beyond making your payments on time, you will eventually get out of debt.
Make paying off debt a priority
Of course, if you want to get out of debt faster, you’ve got to make paying off debt a priority in your life. This also means making sure your spouse is on board, if you’re married. You don’t want to be paying off debt like crazy while the other person is out making more of it. Making it a priority also means deciding that you’re going to say no to other things in the meantime. Of course, you don’t have to cut out all fun, but you do have to think and spend wisely. Then you can use the debt snowball method to get your debts paid off.
Cutting spending
If paying off debt is important to you, put your money where your mouth is. This often means cutting back on spending. And in many cases, it means figuring out what you’ve been spending on in the first place. Take a little time to track spending, because you’ll likely discover areas where you could easily and painlessly cut back. Maybe you have some subscriptions or memberships you could cancel, or maybe you’re paying for other things that you’re not really using (like extra cable channels or cell phone features). And maybe you’ll want to make some sacrifices to get out of debt sooner. Yes, you’ll be giving up a few things now, but it’s not forever. And when you’re out of debt you’ll have a lot more MONEY.
Making more money
Speaking of money, another sure-fire way to make faster progress on your debt is to go out and make more money. Apply that money directly to your smallest debt, and you’ll become even more motivated as you watch it go down — and then disappear for good. Making more money is also critical if you’ve got a tight budget and just aren’t sure what else you can cut. You could get a part time job, do odd jobs around the neighborhood, or even sell things for extra cash. Every extra penny you can bring in is a positive.
Paying off debt is life-changing, so get started today.
You covered all the bases! I’m a big fan of debt snowball method as well! Might be counter-intuitive, but keeps you motivated!
Yup crossing debts off the list will do that for you!
I too think debt snowballs are great. I agree with you that not acquiring anymore debt is the most important. If you can’t control your spending and keep acquiring debt you will never break the cycle and become financially free.
That is definitely the most important, and it means changing the way you view things. (Going from seeing debt as “the” solution in many cases, to seeing debt as a problem and finding a better solution.)
I think stopping the cycle of taking on more debt is both the most important step and the most difficult. I used to pay off a large chunk of credit card debt, get all excited, then immediately think of that available credit when I needed gas or wanted to buy junk. I carried maxed out credit cards for years – I would make it maybe 2 months without using them before charging them right back to the limit. With habits like those, my credit card companies didn’t need to raise my interest or do anything to get more money out of me because I was giving them plenty on my own!
What got you to change?
I may be a little bias here, but I completely agree with your last tip. I think often times we focus so much on cutting expenses that we forget to work on the income side of our ledger too.
I know I forgot about that part the first time I tried to get out of debt. It goes a whole lot faster when you have more money available to put toward it though!
I cannot agree with this more. We have about $63,000 left on our mortgage, are on track to have that paid off by 2017, and then I will freaking bask in debt freedom!!! :-)
Here’s to basking!
Well put! The feeling of relief of financial control is priceless.