Whoever said that eliminating debt is a process was wrong. Eliminating debt is work and hard work at that. To eliminate it completely and quickly can be even more difficult if you don’t break it down into steps. From a broad view point, the pace at which you follow the steps listed below determines the speed in which your debt is eliminated. A fresh way to look at it as well is to view its opposite. When you want to make a lot of money and quick, you want to get paid for the effort and results you create, not a by-the-hour salary. Well, to eliminate your debt quickly, you need to put in the effort and create the results instead of doing one step a week. Following all of the steps listed below is your best chance at eliminating your debt as fast as possible no matter the amount. Whether it is the random generated amount of $4,000 or $40,000 in credit card debit or it is twice as much in student, car and home loans, you can take control.
Paying Your Debt
Before you go after eliminating your debt, write the debts you owe on paper. Make it a visual battle. You can even go so far as to list rewards you will give yourself to celebrate the elimination of your debt in record time. Begin by listing all of your unsecured debts in one column, the total balance of each debt in the next column, the minimum monthly payment in the following column and your new payment in the last column.
Note that when you start off only paying the lowest amounts, you are fighting a losing battle because your larger debts may be accruing greater interest rates. Depending on the amounts of your different debts, you may be accruing as much as the payments you are able to make to the smaller debts. What you want to do is to focus on extinguishing the higher amounts of debt in order to bring the interest rates into the shallow end at the same time as eliminating the lowest balances first.
To explain further, begin paying off the debt which has the lowest balance. While you are doing this, any extra money you create (discussed further in the article) should be put towards paying off the debt with the highest balance. Once you have the first lowest debt paid off, begin making the same payment to the next lowest. With any extra money you may have left over on your payments or the extra income you make, put them toward the largest debt. By the end of this process, your last balance won’t be as large as you imagined and everything will get paid off quickly rather than gradually.
Bonus: There are many different forms of example letters to send to the companies you owe money to which declare that they hold off forcing you to make any payments or making smaller payments in agreement that you will pay it all off within a certain number of months. By all means, call the companies that you owe money to and discuss with them different ways to lower minimum payments so that you can make maximum payments toward other debts. It’s guaranteed that they will be willing to work with you and your situation if you call. The trouble comes when you don’t communicate with them your goals of eliminating the debt and paying them back.
Budgeting Your Debt
Creating a budget is crucial to discovering all the ways you are making an income, all the places it’s going and all the bad habits you can quit to help pay off your debt. Often enough, not having a budget is the reason many people get into debt because they spend more than they make. Before you can begin creating the budget though, you need to keep the mindset that you no longer have an excuse not to write a budget. You have to understand that you won’t be able to get everything you want anymore when you want it and you need to face your fear of writing a budget and just do it if you truly want to eliminate your debt at the fastest rate possible.
While you are writing the budget, focus on finding 8-10 ways to save at least $1,000 dollars each month. You can even discover a larger amount of money that you will use toward paying off your debts by limiting yourself and quitting any bad habits or spending addictions you have. As stated earlier, you have to put the extra effort in to pay off your debt quickly. This can be done by settling for less, skipping the junk food, reusing and recycling, buying items on discount, or simply going without. Remember that going cold turkey with spending is only temporary until you have your debts paid off. If it helps, go back to the paper you wrote your budget on and write all the things you wish you were not giving up and everything else you want during the period that you are working to pay off your debts. Remind yourself that you can have those items, if you choose to, after you eliminate your current debt.
In addition to discovering ways to save money and directing it to paying off your debt, try to find ways to earn an additional income. Do the thing you dread hearing. “Get a second job.” It does not have to be a full-time or part-time job, just a source of additional income. You can do freelance work, work as a virtual assistant, baby-sit once a week or walk dogs for an extra cash advantage to pay off your debts. Again, remember that this is only temporary to help pay off your debt.
Eliminating Debt Bonus Tips
- Start skipping anything that charges you a fee to use. Instead direct that money towards eliminating your dept. Pay attention to where you are getting charged a small amount in order to have what you want. By finding where all the small amounts of money are disappearing to, you can combine them for a large amount of money to pay off your debt.
- Accept any and all help. Whether it is advice from a friend or a professional or the monetary assistance from family members. Make connections with people about your goal to eliminate your debt in a short time period and have them hold you accountable for it.
- The most obvious is to stop adding debt. Hold all large expenses and small pleasures until future time when you have management over your money and not the other way around.
To eliminate your debts in record time, it takes discipline which is a smaller price to pay than your debts. This means that you need to get serious and be aggressive about paying off your debts. Understand that you will have to limit yourself and cut things out of your life but that it is only temporary. Starting from scratch is not hard; in fact, it is way too easy, as long as you have eliminated your debts. As you can tell, by following the processes of eliminating debts, you are setting the stage for money management in the future which will prevent debt from entering your life again. It’s a win-win strategy when you choose to eliminate your debts.