You know what sucks?
Being in debt.
You know what doesn’t suck?
Being debt free.
Let’s go from the former to the latter, shall we?
1. Make a plan of attack
You didn’t wander into debt, and you aren’t going to wander out of it.
You need a plan.
So what might your plan look like?
Various gurus will tell you different things.
Dave Ramsey is a huge advocate of the debt snowball — paying debts from smallest balance to largest.
His reasoning is that the psychological impact of seeing debts disappear quickly is motivating.
Suze Orman suggests paying off debt from highest interest rate to lowest.
This is the most mathematically sound method.
Others say to pay off debts in the order of which you hate them.
This emotional method will motivate you to get really mad at your debt and attack it.
In the end, it doesn’t really matter which method you choose, as long as you are making progress on your debt.
Choose the method that works for you and use it.
2. Only concentrate on one debt at a time
In your plan, you should identify your target account.
If you are going with the debt snowball method, this will be the smallest debt.
If you are going with the interest rate method, this will be the debt with the highest interest rate.
After you knock out your target account, move onto the next debt.
This does not mean ignore all your other debts.
Pay just the minimums on the non-target accounts.
If you don’t make minimum debt payments, you will absolutely kill your credit score.
Set up automatic payments for these non-target accounts to ensure that your payments are made on time, every time.
3. Once you make your plan, stick with it
It is really easy to get caught up in optimizing your debt repayment plan to the Nth degree.
Don’t do this!
You will end up spending more time scheming than actually accomplishing anything.
Unless your original plan has a glaring flaw, keep it for a minimum of six months.
Why?
Well as I said, your method doesn’t really matter that much unless your debts have vastly different interest rates.
Making progress is making progress.
Getting caught up in the minutiae is pointless and a waste of time.
Use that time to hustle or watch cat videos on YouTube.
4. Every day you’re hustlin’
Okay so you have a plan and you are sticking to it.
Now it’s time to pump up the payments, saving you interest and getting out of debt quicker.
My personal favorite way to do this is by making more money.
But how?
Hustling.
And no, I don’t mean pretending you don’t know how to play pool and hustling the much larger and heavily tattooed men at the pool hall.
This will most definitely get you killed punched.
I mean working hard and bringing in more income.
There are several ways to do this.
The easiest way is taking on more hours at your current workplace.
But there?s one problem:
This only applies to hourly workers.
Salaried workers — brownie points don’t pay the bills.
Outside of taking on more hours at work, you could also take on a second job or freelance.
Chances are you are good at something.
Turn that into profit and put the extra cash towards your debt repayment.
Here’s another way:
If you are an awesome employee, you may be able to negotiate a raise at work.
Do this and send the raise straight to debt repayment.
You’ve lived without it before now, you’ll continue to survive.
5. Cut back your spending
Meh.
Like I said, I prefer making more to spending less but you should probably be doing a bit (or a lot) of both.
Frugality can get you out of debt much faster if you allocate your savings to repayment.
So what can you cut?
Well there are small scale and large scale cuts you can make.
Small scale examples:
- Cutting cable
- Making coffee/lunches at home
- Limiting shopping and travel
- Cancelling subscriptions
Large scale examples:
- Downsizing your house/apartment
- Becoming a one-car family, or even ditching the car entirely
Remember:
Saving money is only helpful to your debt repayment strategy if the savings are going towards your debt.
Putting the money towards the aforementioned Louboutins will make you look awesome but your debt load will look the same.
6. Trick yourself into thinking that this is fun
Paying off debt is not fun.
It feels like money disappearing into thin air.
Regardless, being debt free will make each of your dollars belong to you again!
What a novel idea, right?
Make repayment more fun by turning debt payoff into a game — try to beat your projected debt free date, see how much you can increase your hustle income each month, and/or track how much you can cut your expenses each month.
Basically, compete with yourself.
Pathetic?
Yes, but effective.
While repaying your debt is a daunting process, it isn’t actually hard.
It just requires constant focus and a solid plan to make it disappear quickly.
By increasing your income and decreasing your expenses, you will really kick your repayment into high gear and reach debt freedom in a shorter period of time.
Hustle, baby.
7. Negotiate your debt
It’s not easy, but it’s possible to negotiate with your creditors to reduce your interest rate or even reduce the amount of money you owe them.
If you have more than $10K in credit card/personal loan debt, there are a number of companies out there that will negotiate with creditors on your behalf, such as National Debt Relief or CuraDebt.
$10K or more in credit card debt? Click here to see how much you could save.