How to Pay Off Debt Easier and Faster Than Ever
Getting out of debt doesn’t have to be stressful. Make the process of paying off debt easier and faster by breaking it down into smaller, more manageable chunks. This will keep you on track (and motivated) as you pay off your student loans, car debt, or credit card balances.
The key is to start as soon as possible. There’s no reason to wait!
The sooner you start, the sooner you’ll be keeping more of your money for what you want. Remember, you’ve got this! Here are four easy steps to help you get there:
1. Save $1,000. That’s right. We want you to start getting out of debt by not making it your number one priority . . . yet. The first thing we want you to do is save $1,000 for your emergency fund. That way, when life happens, you’ve got life covered—even when you’re paying off debt. Once you’ve got that $1,000 in place, you can pay for any unexpected emergencies with cash, then get right back to paying off your debt!
2. Determine how much debt you have.
Write everything down, then list all your debt, except for the mortgage, from smallest to largest. This is what we call the debt snowball.
Here’s an example:
|Student Loan #1||$6,500|
|Student Loan #2||$12,300|
3. List the minimum payment on each debt.
That might look like this:
|Student Loan #1||$80|
|Student Loan #2||$120|
4. Finally, attack that smallest payment with every bit of extra income you have while paying the minimums on everything else.
So, in the above example, attack that Macy’s debt like it’s a grease fire and you’re holding a fire extinguisher!
Once you’ve paid off the first debt, cross it out, take the money you’ve been putting toward it and add it to the minimum on the second debt. Rinse and repeat until you are out of debt!
Now, we know what you’re thinking: What should I do for extra cash to pay off debt?
- Make sure you’re budgeting every month. When you start budgeting, you’ll be surprised how much money you “find.” What if you’re spending $800 on food every month and could cut it back to $400? That’s a huge chunk to put toward your debt right there!
- Get an extra job. Maybe it’s just a few hours a week or weekends only. But the best way to attack debt is with income. Do whatever you can to add income!
- Sell stuff. Craigslist. Ebay. Etsy. Yard sales. Take a look around your house. What’s in there that you don’t really need? Sell it! Someone you know at work, church or in your neighborhood might want to take it off your hands. Everything you need to pay off a few debts could be sitting in your garage!
Once you’re out of debt, then you can build an even bigger emergency fund and start saving toward retirement. When you’re ready to start saving for the future, you’ll have your finances freed up to do just that.
Remember, getting out of debt isn’t always fun. You might have to make a few sacrifices along the way. But the process itself is simple, and you can absolutely start today—right now even. Just think: Wouldn’t it feel amazing to get rid of interest payments once and for all? (Yes. The answer is yes.)