5 Tips to Payoff Debt Quick!
Like many Americans this time of year, you may be trying to find ways to save money and payoff debt. Many of you may have spent more than you expected on Christmas gifts and the credit card bills are now rolling in. If this is you, there is hope. Make this year your best year yet! The tips I share are ones I used to pay off $45,000 in debt in 17 months! Here are some easy steps that will help you in your journey to payoff debt fast.
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1. Make a WRITTEN plan.
In order to payoff debt fast, you must make it a goal. A goal that is not written down is simply a WISH. If you are serious about paying off debt, write down your goals. You MUST have a plan to payoff debt if you want to do it quick. Tell someone else about your goals and this will help you stay accountable. It is easier to quit something if no-one else knows you are doing it. Writing it down also helps you see the progress you are making. When you get frustrated and want to quit, you can look back at the progress you have made.
Part of having a written plan is having a written budget. At the beginning of the month, write down where you want your money to go. I do a monthly budget divided into weeks since between my husband and I we get paid every week. If you get paid every other week, make a bi-weekly budget. I found this to be much easier for me than just a monthly budget. Doing a weekly budget lets me know how much I have for the week for food and gas and which bills are paid out of which check.
2. Use Cash
Using cash has a different feeling psychologically than swiping a card. When you use cash, it is easier to not overspend. I can’t tell you how many times I would put something in my cart only to put it back at the register because I no longer thought it was worth the money. When I used a card, I would have bought the item plus lots more because we “needed” it. Before having a budget and cash, I never had a plan and would just hope I would only spend X amount. I was always shocked when the total at the grocery store would be over $200. Once I only had cash, it was a lot easier to not grab extra snacks or those things that I thought I needed but really didn’t.
3. Send all extra money to one debt at a time
While you are paying off debt fast, focus on one debt at a time. Some people will tell you to pay the highest interest rate first, some will tell you to pay off the smallest debt first. In my experience, it is more rewarding to pay off the smallest debt first. Getting out of debt is a psychological problem more than a math problem. It is easier to stick with a plan when you can see some progress. If you focus on the highest interest rate first but it’s your largest debt, you will more than likely give up before you have paid it off. When you can knock out some small debts and see some progress, it is motivation to stick with it.
In order to payoff debt fast, you have to actually make payments!
4. Sell everything, work overtime, or get an extra job
If you have debt, it is time to live like you are broke, because you are. And when you are broke, it’s time to sell EVERYTHING and go to work! We sold several things and my husband worked a ton of overtime. There are lots of things you can do to make extra money; get a second job, make crafts and sell them, work overtime, start a side business and many other things.
If you are comfortable with the amount of extra money you have now to send to debt, just think about how much faster you can be debt-free if you find even more money to send. Just remember it’s only temporary until you are debt-free. Then you can do whatever you want with your money because IT’S YOURS!
5. Cut Costs
While we were paying off debt fast, we did several things to cut costs along our journey. I cancelled magazine and radio subscriptions. I also cut back our phone and TV plans. I cut out extra kid activities and memberships (gym and activity center). I cut our grocery budget in half by not eating out, meal planning, and sticking to my list. I had a set amount of money to spend at the store and used my calculator on my phone to make sure I didn’t go over.
We didn’t buy anything extra that couldn’t wait until we were debt-free. I went without getting pedicures or my hair cut and highlighted. We cut out our entertainment budget except for special events, like birthdays and anniversary. If you have debt, you shouldn’t be spending $100 a week on entertainment and eating out. That is $400 a month you could be sending to pay off your debt. The goal is to sacrifice now so you can enjoy your money later.
These are just a few things we did to help us payoff our debt. To read more about how we became debt-free click here. What are some ways that you save money?
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