Debt is such a burden! Borrowing money from one person to pay another is a horribly stressful way to live your life. Aren’t you sick of it yet? How to start paying off debt can feel like an overwhelming thought.
The constant weight of the worry “what if” that you carry around on a daily basis. Think of the full breath of fresh air you can inhale once you get that off your back!
But where do you begin. What is step one and where do you go from there? That is exactly what we are going to be chatting about today.
- 7 Basics to get Started on a Budget
- Get Ahead of Your Bills – No Matter How Much You Make
- How to Get Your 2019 Finances in Order
- Real Life Budget Strategies w/ Missy
- Where To Start When Budgeting Feels Hopeless
5 Quick Steps on How to Start Paying Off Debt
1. Stop growing your debt
It’s mathematically impossible to dig yourself out of debt if you keep growing that number you need to pay back. Think about it, you add $60 to help cover the cost of groceries this week or to buy a new purse you “just had to get”. You then make the minimum payment of $36 this month for your credit card. Your balance, even with the cleared payment, still went up $24 dollars from you purchase!
You have to stop using your credit cards! Get rid of them. Throw them away! Cut them up into teeny tiny pieces and find pride in knowing that you are making some seriously amazing changes for your family’s future.
Worried about an emergency? Let’s get that taken care of without debt!
2. Build an emergency fund ($1k-$2k depending on your expenses)
The next step is to save an emergency fund of $1,000 to $2,000. If you have higher fixed expenses or maybe have a larger family, shoot to save closer to the $2,000 emergency fund goal.
This money should be kept in a completely separate savings account only to be touched in the situation of a true emergency. You can check out this blog post about our family’s 7 savings accounts for an example on how to do that.
Having this money set aside will better your chances at not having to grow your debt ever again. This is your new safety boat!
3. Total it all up
You need to get a clear picture of what you are working with here. Figure out what the total of all your debt is, with the exception of your mortgage. You can tackle that beast once you uncover how strong you are after paying off these consumer debts.
Chances are that whatever this number turns out to be, it’s gonna be a bit of a shocker. Don’t be discouraged. Keep your eye on the prize. Think about the dream worthy goals you and your family will be able to make a reality once your debt is gone.
Write down a list of all your debts, their interest rates, their separate totals, and then a grand total. Doing this is going to make the decision process of where to start a lot easier and will also be a great visual as you start to slash them off the list once paid off.
4. Plan of attack
You are going to have to pay Now that you know exactly what the numbers look like, which debt do you demolish first? There are two options that you can customize depending on what you think will keep your family motivated the best.
The first option is to start with the debt that has the highest interest rate. This in the long run will save you more money from going towards a growing debt acquired by the faster interest rate.
The second option is to start with the debt with the smallest balance. This is the option we went with when we were attacking our debt. It’s a great option if you need help keeping up your motivation to keep going.
You will quickly realize the satisfaction gained when you make the final payment towards a debt and cross that baby off your list! The key here is to use that money you were using to pay off the last debt, and roll it forward to work on the next one on the list.
5. Where do you get the extra cash?
This all sounds great but we can barely make the minimum, how can you expect us to make extra payments on our debt? Am I reading your mind? That’s because this is where we got stuck too.
It’s gonna take some hard work. What’s good is that you can do hard things!
There are a few things you can do to create extra cash to put towards your debt.
The first and easiest way to do this is to minimize your expenses. You even might need to get a little drastic on this step. Remember that in order to dig yourself out of debt it is going to take some sacrifices but the good news is that these sacrifices can be temporary. Just until you become more financially self reliant.
So it may be necessary for you to cut back drastically on your spending. There is just a handful of expenses that are truly necessary. Modest housing, transportation, basic clothing, utilities, and food. The money you save from cutting back your spending should all go towards paying off your debt.
You have to go check out our most recent Pearl Life Chat with Missy! Her and her husband made some major sacrifices in order to get out of debt!
The next option to get some extra cash fast is to start selling your stuff. Dig deep into your Marie Kondo self and get rid of anything that doesn’t bring you joy and is just taking up space. Sell what you can and use that cash to go towards your debt. Every little bit adds up really fast!
The last option would be to find additional income through a side hustle. I get really excited helping our Pearl Students brainstorm different ideas on how to turn their hobbies into a way to bring in extra income to use towards their family’s goals.
Sure you could go get a job at Target, but with the way the internet is today there are literally a million ways to make money from home doing something that you think is fun! Get creative! Can you teach a skill through an online course? Can you make and sell something? Is there something you recently have been on the search for and can’t find? Maybe you can fill that void!
If you are passionate and willing to put in the hard work, you can make it work!
Ready to get to work? Ready to fight your way out of the bondage your debt is currently holding you in?
These steps don’t seem that complicated right? That’s because the theory behind them is simple. You can totally do this!
But maybe you are getting stuck when it comes to figuring out how to work this debt free strategy in with your bills? How do you fit extra debt payments into an already really tight budget?
Don’t let these questions paralyze you from progressing towards your freedom!
In my online course 30 Day Family Finance Rescue I teach you how to tackle these obstacles. How to make sure that you are getting your finances set up CUSTOMIZED to your family’s unique financial makeup and life events.
If you have tried to get this figured out before but keep falling off budget and are stuck living paycheck to paycheck, it’s because you are starting in the wrong place!
Your finances don’t start with the numbers! It first starts with your money mentality. Your attitude and habits that you have with your money. Then, you need to figure out what your goals are for your family’s future. This is the fun part! You need to dream big if you want to get anywhere. Finally, you need a financial action plan worked into a goal based budget to insure that you reach the dreams you have for our family!
All of these vital steps are what is covered in 30 Day Family Finance Rescue. You can click here to get more information or to sign up for the waitlist if enrollment is currently not open. The doors for the course are only open a couple times a year, so you do not want to miss your chance to rescue your family finances!