Everyone wants to get out of debt fast. But the reality is that it took you time to get into debt, so it may take a while to get it paid off. But, that doesn’t mean it needs to take you forever to become debt free.
Debt can cause a lot of stress and financial anxiety. If you are in this situation, it might feel like you will never get there. You keep paying and your debt balances don’t seem to drop at all!
My husband and I were in this situation a few years ago. We just felt like we were drowning in debt. Between two loans, a credit card and home equity loan, we were spending a lot more money than we wanted.
We made the decision that we were going to work ourselves out from under our debt. It was not going to be easy, but it was something we both wanted. There were a few things we did to help us reach our goal to be debt free.
SIX TIPS TO PAY OFF DEBT QUICKLY
1. One debt at a time
When you are in debt “up to your eyeballs,” all you can think about is trying to get rid of all of it as soon as possible. It makes you lose focus.
When you start, find one debt on which to focus. Rather than put an extra $10 on every single debt, send in an additional $50 on just one debt – until you pay it in full.
An additional payment on a single debt allows you to see real progress. Each month you will see the balance dropping. That helps to keep you motivated.
2. Automate it
Once your budget is in place, and you have found a way to make an additional payment on your debt, automate the process.
By doing this, you will be less tempted to use any “extra” money towards either another debt or something else. When the payment is automatically deducted from your account, it removes the temptation not to make the payment you want.
3. Set goals
When we were working out from under our debt, we set up goals and rewards. One sacrifice we made when working out from under our debt was that we did not have meals out. It was NOT easy. We decided to reward ourselves for our hard work by having a nice dinner out when we paid off a debt.
That gave us a goal. Determine what goals you know will work and set them. Make sure they are in writing and visible, so you are reminded of them every single day.
4. Make more money
We all want to make more money. However, if you are in debt, you need more income. More money helps you pay off your debt more quickly.
5. Decide not to spend more
The most important thing you must do to pay off your debt is to stop spending. Cut up the credit cards and do not use them. If you shop out of boredom, find a new hobby or way to entertain yourself. Before you can get out of debt, you have to stop building up more debt.
6. All excess cash towards debt
When you get any extra money, be it a tax return, bonus, refund – anything at all, toss it at your debt. It is tempting to use a windfall for a new gadget or shopping trip. However, when you are in debt, you need to have laser focus, and any time you have even $5 left over out of your budget, you pay it towards your debt.
Your debt doesn’t need to take forever to pay off. You just need to have a plan and stick with it.