Figuring out how to pay off debt for good can be overwhelming. Here are tips to help you pay off debt for good, stay out of debt, and gain financial freedom.
Not many people like the idea of debt hanging over their shoulders.
Whether the debt is from student loans, poor financial decisions, or medical treatments, living under the cloud of debt is stressful. It feels like you’re drowning and the lifeguard is off-duty.
However, it can also be overwhelming to figure out how to pay off debt for good.
Here are some things to keep in mind when you decide that it’s time to beat your debt!
7 Ways to Pay Off Debt and Gain Financial Freedom
1. List your debt from smallest to largest.
Knowing exactly how much money you owe is eye-opening. Listing your debt from smallest to largest will help you realize that something needs to be done. Plus, knowing which debt you will knock out first is important. The point of paying off the smallest debt first is so that you get “small victories” that help motivate you to keep paying off debt faster.
2. Find a way to bring in extra cash.
You are where you are because of a cash flow problem. No worries. It’s easy to fix when you know what the problem is! Your next step is to find a way to bring in extra cash. This may be picking up a second job or doing a side hustle to bring in extra income. Use the extra income to pay down balances.
3. Do things yourself.
You are going to need as much cash as possible to help you reach your goals. That means when things go badly, you need to do things yourself. Of course, there are times when an expert is needed, but for the most part, doing things yourself can help you save extra cash! Youtube is your friend!
4. Find ways to stay motivated.
Set little goals for your family to help you stay motivated. Every time you reach one of these mini goals, treat the family (cheaply). There are so many inexpensive things you can do in life. Remember that money won’t ever make you happy. Although, I know it’s nice to be able to do things with your family.
5. Get rid of the extra stuff in your life.
It’s time to get rid of the excess! Sell anything and everything you can. Don’t keep things around the house that are worth money. Selling your stuff is a great way to reduce the looming cloud.
6. Set a budget.
The word budget isn’t a bad word. It is simply setting limitations to help you live your life to the fullest, once the debt is paid off. It feels like you’re missing out, but you aren’t. You are simply living within your means for possibly the first time, and that can hurt, but it’s totally worth it.
When creating your budget, don’t forget to add in fun money. It’s nice to be able to go out with a friend for lunch or to buy that book you want to underline. You’ll be glad you did.
7. Use Cash.
No one uses cash anymore. I hear you. I really do. Drastic measures need to be taken to help you get out of debt. Use the envelope system. Look at the budget and figure out how much you can spend each month on groceries, gas, utilities, car payments, etc. Once you have the numbers, use envelopes to hold cash for things like groceries. Once the money is gone, it’s gone. It may take a couple of weeks to figure out the system and change old habits, but again, it’s worth it.
When you have reached your money goals, I’m not opposed to credit cards. Find one you can pay off each month and get travel credits for future trips.
Beating your debt and getting rid of it for good is a lot of work.
New habits will start forming and when you pay off that last debt, you will experience freedom and be able to breathe again.
What tips do you have for someone trying to pay off their debt?