Let’s
face it — debt sucks! Keeping up with the payments means less cash to do what
you really want. And, the interest makes the burden grow, often faster than
your payments reduce the balance due. With a solid plan and a lot of
determination, you can ditch your debt and get back to having more fun.
Not
sure where to start?
Here
are Charlie’s 6 steps to ditching your debt:
Stop
the Bleeding
Unless
it’s completely unavoidable (like that student loan for next semester), don’t
take on any more debt. Avoid new credit cards, lock up/cut up the ones that you
have, and consider freezing your credit. It’s important to take control.
Assess
the Damage
Now,
it’s time to see what you’re up against. Make a list of all of your debts to
include who you owe, how much you owe, the minimum monthly payment, and the
interest rate. Then, brace yourself and determine the grand total. (It’s
OK to have a glass of wine, a chocolate cake, or a bubble bath after this
step!)
Choose
Your Strategy
There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from smallest to the largest amount owed. This is great for momentum building — you’ll feel like you’re #winning pretty quickly. With the avalanche method, you pay off your debts from highest to lowest interest rate. Ultimately, the math works out in your favour here because you’ll pay less in interest overall. If you’re paying off debt, ignore any haters, because it’s a victory regardless of how you do it!
There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from smallest to the largest amount owed. This is great for momentum building — you’ll feel like you’re #winning pretty quickly. With the avalanche method, you pay off your debts from highest to lowest interest rate. Ultimately, the math works out in your favour here because you’ll pay less in interest overall. If you’re paying off debt, ignore any haters, because it’s a victory regardless of how you do it!
Tighten Your Purse Strings
Trimming your budget may be painful at first but crushing your debt will feel amazing. There are some easy places to cut spending first: eating out, shopping, travel, entertainment, etc. If there are things you can’t cut completely, find hacks to spend less. Use gift cards, skip the expensive cocktail at dinner, or shop thrift stores. If you can’t cut these categories any further, consider going more extreme. Get a roommate, sell your car, or move back home. These strategies are hard and may not be possible for you (or you’re already doing them!), but every dollar helps.
Trimming your budget may be painful at first but crushing your debt will feel amazing. There are some easy places to cut spending first: eating out, shopping, travel, entertainment, etc. If there are things you can’t cut completely, find hacks to spend less. Use gift cards, skip the expensive cocktail at dinner, or shop thrift stores. If you can’t cut these categories any further, consider going more extreme. Get a roommate, sell your car, or move back home. These strategies are hard and may not be possible for you (or you’re already doing them!), but every dollar helps.
Hustle
for Extra Cash
In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for side gigs, sell your stuff, or offer freelance services.
In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for side gigs, sell your stuff, or offer freelance services.
Track
Your Progress
Ditching your debt is hard work. It takes commitment and willpower. This process could take a long time, so it’s important to track how far you’ve come to keep your motivation level high. Be sure to reward yourself (in a budget-friendly way!) as each account balance hits zero.
Ditching your debt is hard work. It takes commitment and willpower. This process could take a long time, so it’s important to track how far you’ve come to keep your motivation level high. Be sure to reward yourself (in a budget-friendly way!) as each account balance hits zero.
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This article was originally published at HiCharlie.com.
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Thanks a lot for sharing these tips here. Debts are never good. Your tips are really helpful in this regard.
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