For those who have a large amount of debt, it can seem like it’s going to be forever before you finally get out of it. And that’s totally normal to feel that way.
But you don’t want to fall completely behind, right? You still want to get through the process and pay off that debt? Well, you can absolutely do it.
Write Your Plan
Not having a plan is going to make you lose motivation. You don’t really know what you’re doing and you feel like you’re not doing it right. And when the time frame is long it feels even worse.
One thing you can stay in control of is your plan. You can create the plan and you can decide just how you’re going to make it work for you. That’s definitely going to make you feel a whole lot better in the long run.
Now, if you have multiple debts and you’re just going at them blindly then you’re going to spend a whole lot more. You’ll spend more time and you’ll spend more money because you’re paying even more interest.
That’s why there are two different methods you can use to pay off that debt. You can use the snowball method or the avalanche method. The first, the snowball method, asks you to look at your debts in order from the lowest balance to the highest. You would then start putting all the extra money you have toward that one debt.
When you manage to pay off the first debt you take that amount of money plus whatever else you have and pay it toward the next lowest and then keep going from there. The big benefit is that you’re going to start paying off debts quickly and you’re going to have more motivation.
The other option is the avalanche method, where you look at interest rates instead of balance. The highest interest rate goes first on the list all the way down to the lowest rate. Then you start by paying as much money as you can to the account with the highest interest and work your way to the lowest in the same way we just talked about.
You can use either one of these methods to help pay off your debts. Just choose the one that works out the best for you and stick to it. Also, you can always combine it with other strategies such as the debt snowflake method.
Even better, make sure you write down what you’re doing and how you’re going to get there. It’s going to make you more committed and it’s going to make it easier for your brain to focus on.
Create, Stick and Adjust Your Budget
The first thing is actually making that personal budget and it doesn’t have to be as difficult as you might think. You just need to start by planning out your monthly spending. Pay attention to what you spend on anything from groceries and housing to entertainment and gasoline. You can use your credit cards to help you figure it out.
When you’re working on your budget you should also take a look at expenses that you could be spending less on. These are some of the discretionary aspects that you’re probably not paying attention to. But cutting spending in these areas can help you pay your debt faster.
Make sure that you stick with your budget even after you pay off your debt as well. You want to be able to stay out of debt and you want to build up an emergency fund so you can still be safe even if something comes up and you find yourself struggling to alter on. Even more, keep looking at the budget every month so you can make changes where you need to.
If you’re always having a problem in the same areas of your budget you may need to take a closer look at your expenses again. See if you’ve underestimated some of your expenses or some things that are important to you. From there, you can make adjustments and keep going.
Get an Accountability Partner
If you have someone that’s willing to help you out it can actually be a great benefit in keeping you on budget.
Your accountability buddy could be anyone you want. It could be a friend or family member or it could be a community that you create online. You just want to tell them what your goals are and then make sure that they’re going to hold you accountable to following that goal.
Don’t Sweat the Setbacks
You’re not going to be perfect. You’re going to have months where you have to make changes or where something just doesn’t work out the right way. You might even have to step back and make only minimum payments on something for a while.
But that doesn’t mean it’s time to give up. It means you keep evaluating and as soon as you’re able to get back to your full plan you do it.
Hold yourself accountable to getting back on schedule but give yourself a little bit of slack when things just don’t work (as long as you’re trying hard to make it work).
Keep Debt Out of the Equation
You’re trying to pay off debt so make sure that you’re not adding new debt into the mix while you do it. You should absolutely make sure that you’re not spending on your credit cards during this process.
If you find that you’re tempted to use them then cutting them up or locking them away is a good idea. If you can keep yourself from spending then just put them up somewhere and promise yourself you aren’t going to use them.
You definitely don’t want to add debt to your problems. It’s only going to make sure that you stay in debt forever and that’s going to keep you discouraged. So, pay attention to what debt you have and focus on getting out of that.
Stick to Cash
Spending with cash is going to be the best thing you can do about debt because if you only use cash you can’t get into even more trouble. Using the envelope system is one way to do this, meaning that you have to spend money only in the approved categories that you’ve set, and only as much money as you’ve allocated to that area.
For those who struggle with keeping track of their spending, this is a great way to pay attention and to make sure that you’re finding the problems right away. You’ll notice where you run out of cash.
Don’t Get Too Greedy
It’s really easy to create a budget and say you’re going to do all of these amazing things with your money, but are you actually going to be able to stick to that budget? If the budget you create isn’t realistic then you’re going to discourage yourself and you’re going to feel frustrated. That’s going to make you less inclined to stick to the plan.
Instead, look at your income and expenses and then look at how much money you can realistically put toward paying off your debts. You want to put as much as you possibly can toward those debts, but don’t beat yourself up about getting them paid off more quickly than is actually reasonable.
You can use a debt calculator to help estimate how much time you’re going to need in order to make the payments and get yourself debt-free as well. And the more you pay the faster that time is going to come.
If you can read stories of other people who have succeeded in their debt reduction goals it’s definitely going to inspire you to how you can do it too.
You’ll be able to find these stories all over the internet and you’re definitely going to find blogs and articles from people who have been in even worse shape than you.
You might also find out some tips and tricks that you could be using to help get you out of debt faster, and that’s going to really improve your odds.
Plan for No Debt
Start looking at your budget and imagine what you could do with it if you didn’t have to pay off that debt. What could you be doing?
When you start really paying attention you’re going to see that the process is going to take a while, but you can absolutely get it done and you can absolutely set yourself up for success. You’ll see that a whole lot of freedom is there if you can get rid of the debt first.
Know Why You’re Here
Think about why you’re on this journey. What is the purpose that you have behind getting out of debt? Do you want to save money from that interest? Do you want to get a new house? Are you looking to save for retirement?
No matter what the reasoning is you should focus on that while you’re working on getting out of debt. That’s where you’re going to get the motivation that you need.
Make sure you write it down and then, when you’re feeling overwhelmed and unmotivated, go back to those words and read through them. When you can see why you’re doing what you’re doing it’s definitely going to make you more inclined to stick with it when things start getting hard.