Do you want to become debt free?
Would you like to no longer have debt payments hanging over your head?
Do you want to stop living paycheck to paycheck, and instead be able to save for the future?
Paying off debt is hard work. If it weren’t so hard, then it would be no problem for people to do. But, that isn’t the case at all.
Once you decide to pay off your debt, there will be challenges along the way. There will be times when you feel tired and even defeated. Paying off debt takes sacrifices, it takes time, and it can feel lonely. Yes, you may feel like you are the only one working towards being debt free.
If it were easy, then everyone would be debt free.
But, paying off your debt and living debt free is all worth it!
Paying off your debt can have so many positives.
I paid off my student loan debt quickly ($40,000 student loans paid off in 7 months), and while it was extremely tiring, I wouldn’t change it for the world.
There were many sleepless nights, 100 hour work weeks, and more, but I always reminded myself that this wouldn’t last forever. I knew that I wanted a different life and that paying off my debt would be 100% worth it in the end.
And, while you may feel like it’s awful right now, here are some positives of living debt free:
The first step to becoming debt free is to face the issues that led to your debt.
I believe that if you don’t know what your problems are to begin with, then it will be very hard to make any positive changes.
Yes, it is great to just start attacking your debt, but you also don’t want to fall into the same cycle of going into debt over and over again.
You need to realize why you are in debt. You can start by answering the following questions:
Of course, there are other reasons for why you may be in debt as well, such as having medical debt or student loans. But, these questions are a good starting point.
In order to pay off your debt, you will need to figure out why you are in debt. By understanding why you are falling into debt, you can begin to prevent yourself from falling back into a debt cycle.
However, until you dig deep and realize this, the debt cycle will never end.
Side note: I highly recommend that you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. And, it is FREE.
This is related to facing your problem, as adding up your total amount of debt will help you realize how to gain control of it.
This will help you to truly understand how much debt you are dealing with.
Plus, most people have no idea how much debt they have. And, many people are terrified to take this step, as it means that your debt is more real.
By adding it up, you will have a more realistic view of your debt problem.
Surprisingly, when most people complete this step, they realize that they have a lot more debt than they originally thought.
You should add up your debt down to the exact penny – don’t estimate!
This sounds obvious, right? Like I said earlier, if you don’t know why you are in debt, then it would be hard to stop adding to your debt and become debt free.
Also, if you’re eliminating debt but also adding to it at the same time, then you won’t get anywhere fast.
Different ways that you could prevent yourself from adding to your debt include:
Most people have student loans, credit card debt, a mortgage, car loans, and sometimes many other forms of debt. However, not many people have a budget.
Budgeting can help you take control of your financial situation so that you can finally become debt free.
You should create a realistic budget so that you truly know how much you are spending. Then total how much you actually bring in each month. If you are bringing in less than you are spending then a change definitely needs to be made.
A budget can also help you see where your money is going so that you know what areas you need to work on. Maybe you never realized how much less money you earn than you spend each month, which is causing you to go into debt.
A budget really puts that in front of you so that you know what you can cut out of your spending (or at least lower your spending in that area).
Read more at The Complete Budgeting Guide: How To Create A Budget That Works.
Credit cards are not free money! Unfortunately, too many people treat them like they are.
If you are using a credit card, you should always make sure that you have cash or money in your personal bank account before thinking you can afford something.
I’ve heard many stories about people who continue struggling with credit cards and keep adding to their debt. And I’m always shocked when I find out it’s simply because they don’t understand how credit cards work.
Here are some of the things that I recommend knowing about credit cards:
Learn more at How Do Credit Cards Work? I Answer The Most Important Questions.
Having your financial goal displayed in front of you can make it that much more real, plus it’s nice to have a constant reminder of what you’re working towards.
Various ways to make your financial goal visual include:
A great way to stay on track so you can one day be living debt free is to read motivating debt payoff stories.
By reading other people’s debt payoff stories and learning how to become debt free, I believe that you can find motivation to pay off your own debt, learn new ways to become debt free, and realize that paying off your debt is possible.
Here are some debt payoff stories from Making Sense of Cents readers:
If you want to learn how to become debt free, I recommend downloading this free debt payoff plan worksheet.
An emergency fund is something that everyone should have. However, many households have no emergency fund whatsoever.
This is scary to me, as having an emergency fund can greatly help you get through hard and unexpected situations that may arise.
An emergency fund can help if you:
Plus, an emergency fund can help you to stop adding to your debt. This is because if an emergency does arise, you won’t be forced to rely on credit cards or borrowing money in order to solve your situation. Instead, you’ll have your emergency fund to bail you out!
Read more at Why You Need An Emergency Fund and How To Start One Today.
Too many people live paycheck to paycheck. This can lead to credit card debt, high interest rates, and more.
You should always be spending less than you earn – a must if being debt free is your goal. If you aren’t spending less than you earn, then you need to find ways to cut your budget and/or increase the amount of money you earn.
And if you want to learn how to become debt free on a low income, one of the issues is that you might be spending money on things that you just cannot afford, like an expensive cell phone plan, going out to eat, and more. However, if you’ve exhausted all of the ways to reduce your spending, I recommend checking out the next section on making more money.
Finding ways to save more money may allow you to pay off your debt a little faster, improve your financial habits, help you reach your dream sooner, and more.
Depending on how quickly you want to get rid of your debt, there are different things that you may want to cut out. You could cut out Starbucks (I know, I know, so cliche), lower your restaurant spending, find a cheaper way to workout, sell your car for something cheaper/more affordable, cook from scratch, get rid of cable, and so on.
There are many ways to cut down on your spending. Below is a quick list for you to start with:
Learn more at Here Are 50+ Of The Best Ways to Save Money This Year.
I believe that earning extra income can completely change your life in a positive way. You can stop living paycheck to paycheck, pay off your debt, and more, all by earning extra money.
In fact, because of extra income and my blog, I was able to pay off $38,000 in student loans within 7 months, leave my day job in order to pursue my passion, travel full-time, and more!
Honestly, if you want to learn how to get debt free fast, making extra money is probably the fastest way to pay off your debt. This is because there are many ways to make $500, $1,000, $2,000 or more each month that you can put towards your debt.
If you also reduce your spending, just think of how quickly you can become debt free!
Different ways to make extra money include:
If your problem with debt is that you don’t know how to correctly use credit cards, or credit cards are too tempting for you, then you may want to get rid of your credit cards and try using cash.
A cash budget is when you pay for the majority of your purchases in cash. Of course, there are certain expenses, like a mortgage payment, that cash might not work for, and that’s okay. For the most part, almost all spending is done with cash when a person is taking part in a cash budget.
A cash budget can help because:
Talking about money and conducting regular family budget meetings is an important task for every family and serious relationship.
This is especially true if you have debt!
A family who has regular money talks and budget meetings is more likely to be financially successful and happier than a family who doesn’t.
Regular money meetings can lead to better communication between family members, a more unified financial goal, family members being more involved and motivated, and more. This is how to better yourself for your current and future financial life.
In your budget meetings, you can discuss:
There is no right or wrong answer as to what should be discussed in a money meeting.
The key to a successful meeting is that you are all up-to-date on what is going on so you can work together towards your family’s financial goals.
In order to be debt free, you’ll have to pay off your debt!
No surprise there.
Paying off your debt can lessen your stress levels, allow you to have more money to put towards something else (such as retirement), stop paying interest fees, and more.
Here are some more tips to pay off your debt:
Do you have debt? Are you trying to pay it off faster and start living that debt free life?