5 Quick Tips To Get Out Of Debt
We’ve talked a bit about debt in my previous Wednesday Wealth Chats and in a nutshell, it is the thing that is holding you back from financial freedom and true wealth. There is something extremely liberating about not owing anyone any money. No monthly payments. No interest fees. No late fees. Just pure living and thriving. Today on the blog I am sharing 5 things that I did to help me get out of debt in hopes that it will help you also.
Create A Budget And Stick To It
You can read about how to create a budget in this post. Your budget is a roadmap of your finances. It tells you how much money you make and how much you can afford to spend. I’ve realized over the years that debt occurs when I try to overextend myself or buy something that I cannot afford. Create a budget and stick to it. It definitely isn’t easy, but it is rewarding.
Commit To Saving Money Monthly
Even if it’s just $100 to get you started, save money every month. When those unexpected expenses come about, or when emergencies happen, it’s important to have a rainy day fund. This was a huge adjustment for me in the beginning. If I had money left over after bills, I was always tempted to go buy something, but I’ve shifted my mindset to saving and it has saved me from falling into the debt trap when emergencies pop up.
If You Don’t Need It, Sell It
You’d be amazed at how much money you can make by selling things around the house that you either don’t need, shouldn’t have bought in the first place or that no longer serves you. I still find myself putting things on Facebook Marketplace to sell things that I don’t need. I made $700 one weekend just cleaning out my office. This one is a bit uncomfortable and if you are in a tough spot, it can also be very humbling. But think about what your financial goals are, set your pride aside and start bringing in some cash to pay off debt.
Pay More Than The Minimum Payment
The key with this point is to remember that interest is not your friend, especially when it comes to monthly payments. It takes away from the amount of money that you are putting on your monthly principal. Anytime I have paid off a debt fast, I paid significantly more than the monthly payment. Think bonuses at work, cash gifts, etc. – rather than treating yourself to something new, put that extra money on debt. Yes, I know, it is not how you want to spend the money, but the sooner you get out of debt, the sooner you’ll be free to spend your money on whatever you want – Interest free. Debt free. The eye opening moment for me was when I reviewed my amortization schedule for one of our previous homes. I had never really paid attention to it before, but when I finally took a look, I realized that our monthly payments were mainly going to interest. Which sparked a fire in me to get out of that debt cycle because our society is built for you to stay in it if you don’t take actionable steps to free yourself.
Create A Plan To Repay All Debts
Write it down. Post it everywhere. Set reminders. Plan a big celebration once you achieve your targets. Having a clear plan, with your timelines laid out, will help you stay on course and remain focused when paying off debt. We have an Excel spreadsheet that has all of our goals, the ideal timeframe of when we would pay off the debt and what our net worth + monthly cash flow will look like once we do pay it off. It is extremely motivating to have that spelled out for us. We know what we want to accomplish so every time we marked off a debt, it inspired us to keep grinding for the next goal. I have Q1 targets that I am trying to reach through the blog to help pay off one of our rental properties and in doing so, it will open up the door for larger investments that we have our eye on.
What’s your payoff plan? What will your monthly cash flow look like once you accomplish that goal? Write all these things out! It will help you stay on track and motivate you to keep going.
I love chatting about wealth and sharing a bit about what we are doing as a family to build our finances in a way that will allow us to live however we want in the coming years. Our approach is slow and steady. We live very modestly on purpose. But the pay off is great. I hope you guys are loving these posts!
Until next week …
XO – Steph