Apr 22
Written ByMelissa Houston
It drains us of our energy.We spend so much wasted time and energy stressing out about the amount and figuring out how we will ever pay it off.We worry about the payments and we HATE having to scale back on the things we enjoy in order to pay the debt off.The situation really stinks.
It takes a lot of effort and discipline to get this paid down.When you find yourself in the unfortunate situation of debt, it is important to pay it off as quickly as possible.Don’t get trapped in the cycle of debt.
Susan knows this.Susan had racked up well over $20,000 in consumer debt alone, and had nothing to show for it except some fancy clothes, bags, shoes, and the memories of spending spree hangovers.She had gone on a good eight month spree, and now that the credit has run out and she is so far in debt that she has no idea how to pay the bills, she is freaking out.
“When I was in spending mode, I didn’t realize what was happening. Now that I have distance from my spending spree, I can see how quickly and easily the debt grew.” – Susan
Susan recognizes that she never should have spent all that money, and now fears for her financial future.She has decided to get her finances in order, and signed up for a copy ofThe 20 Minute Money Method.
When you find yourself in Susan’s situation, the best way action to take is recognize the debt and start paying it down as quickly as possible.
Follow these tips:
1.Pay more than the minimum monthly payment.
People often pay just the minimum payments on their debt with the belief that they are keeping more money in their pockets (so they can still spend more).The harsh reality is if you are paying minimum payments, you are hardly putting a dent against the principal portion of the debt and the majority of your payment only gets applied to the interest expense.If you pay your debts this way, it could take twenty years or more to pay it off in full.And I cringe when I think about how much in interest you would be charged.
Pay your debt off as quickly as possible.
2.Try the debt snowball method (pay off most expensive debt first).
The idea behind this method is to pay off the debt with the highest interest first, then move down the list, because the higher the interest rate, the more in interest expense you will be paying.Susan tracked her debt payment progress in a visual way by making charts that visually showed the success of her efforts.That kept her motivated to pay down the debt.And every step she took towards repayment made her feel good.Susan slowly gained back her control over her money with every step she took towards paying it off.
3.Pick up a side hustle.
Yes, a part time job or any way you can make some extra cash to apply that money to your debt.There are a ton of ideas for side hustles on the internet.Try to find a side hustle that pays well and works around your schedule.
Susan decided to pick up extra hours at her current job to increase her monthly income and put that extra money towards her debt.
4.Live within your means.
This is the one most people do not follow and it is the quickest way to get yourself into massive amounts of debt.This is the trap of using credit cards – mindless shopping habits that have you charging your impulse purchases.These add up so quickly, and the next thing you know you’ve blown your monthly budget by $1,000 or more.If you are doing this every month, the debt adds up quickly.
Amanda did this, until it caught up to her.She was shopping for necessities when she spotted a perfect outfit.It was $100 on sale, and it was a steal!!!She had to have it but she knew she couldn’t afford it.She quickly dismissed the logical voice in her head that told her she couldn’t afford it, and bought it.
That night, friends asked if she wanted to meet up for drinks and dinner.She had no cash to pay for the outing, but payday was coming up so she decided to go and spend $100 on the night out.She charged her card.
This was $200 in one day of mindless spending in one day.If Amanda had 15 days of spending like this in one month (which is not hard to do), she would have $3,000 of charges and no way to pay the debt.Because she had no cash and couldn’t afford it.
Living within your means requires MINDFUL spending.Making conscious decisions.
5.Cut back your expenses.
All too often we can find extra savings in our monthly subscriptions (cut the cable, cut the landline, unsubscribe to every streaming channel out there, unused gym memberships, etc).We can also cut back on eating out, and plan our meals at home.And groceries!!That is one of our biggest expenses and there are so many ways to cut back on groceries.
Sign up for a copy ofThe 20 Minute Money Method.
6.Sell everything you don’t use/no longer need.
Go through your basem*nt, closets, garage, and take inventory.Are there any items you can sell to make some money?
Host a garage sale or sell your items on line.Not only will you be making some extra money, you are also decluttering, and that is another fantastic feeling!
Apply the money that you made on your sales to your debt right away.
7.Negotiate a lower interest rate on your credit cards. Negotiate any bills you can.
A lot of people are not aware that this is a possibility.All you need to do is call the number on the back of your credit card, have a lovely conversation with the person on the other end of the line, explain your situation and ask if there is anything they can do to help you out.Ideally you’d like them to lower the interest rate that you are paying while you pay off the cards.A typical credit card company charges 20% interest, which is crazy high.If they could cut that interest rate to half or more, that would save you a ton of money in interest payments.Chances are, if you are a good customer with a decent credit rating, there is likely something they can do for you.It never hurts to ask.
8.Consider debt consolidation for a lower interest rate.
Sometimes debt consolidation can offer a much lower interest rate and can offer repayment plan that is manageable for you.If your debts are overwhelming, you have a lot of high interest debt, consider a consolidation loan.But remember, a debt consolidation loan can lower your credit score, but then it will go back up as you start making payments.
9.Consider becoming a one car family.
Cars make a huge dent in our budget, and making sacrifices often come with paying off debt.Losing a car will save you money in gas, insurance, and car payments.Cars are very expensive to own and maintain.
Have a good look at your situation to determine if two cars are really NEEDED in your family.Could you walk more (extra fitness) or take a bicycle to places you need to go?Public transit?
With proper planning and life adjustments, it might not be that hard to reduce to one car.
10.Stop living life on borrowed money.
Banks are not doing you a favour by giving you credit.They know that the average person will be tempted by that credit and spend it.Banks make a TON of money off of consumer debt.Don’t line the banks pockets and stay away from borrowing money.Keep that interest you would have paid them for yourself.You’ll be so much further ahead financially.
If in debt, feel the urgency of needing to pay that off.When you want to purchase the next shiny thing, ask yourself if you really need it.How would your life be improved by this item?How many hours of work would you have to put in to pay for this?When people start thinking of the currency in TIME rather than dollars, it can really put things into perspective.If that new shiny item takes 6 hours of work to pay for it, it might lose its appeal to you.
If you’re tired of living a life of stress/shame/guilt/failure and want to work towards freedom, happiness, and joy, make the decision to work towards change.
And remember, you need to change your spending behaviour so that this doesn’t happen again.If you don’t make permanent changes, then once you pay off the debt, you will likely find yourself in the same place.
Spending money excessively is behavioural.
Remember, when you change your habits, you change your life.Live your best life.
If you’re tired of living a life of stress/shame/guilt/failure and want to work towards freedom, happiness, and joy, make the decision to work towards change.
Grab a FREE copy of “The 20-Minute Money Method’“ that outlines the steps to get you on your way from debt to success!!!
⬇️⬇️ Download your copy ⬇️⬇️
