Know Your Numbers
First, you need to know what situation you are in. Do you have a little bit of credit card debt? Do you have a lot of student loan debt? Maybe you have both. It is crucial to know how much debt you have accrued and equally as important to know how much income you are generating each month. The first step to paying off any debt and reaching financial freedom, is understanding where you currently are. Write down both your income and expenses for the month. If your expenses are higher than your income, you have a problem and it's time to make a plan!
Create a Plan
Once you are familiar with your numbers, you can work towards setting a goal date of when you will have your debt paid off. In order to meet this goal, you will have to create a plan and stick to it. A great planning tool is a budget. If you don't have one already, create a budget and determine how much money you are able to allocate to paying off debt each month.
Increase Income
As I mentioned before, if your expenses are higher than your income, you have a problem. If this is you, it is time to start finding ways to cut back on your expenses or generate more income.
Finding ways to make more money seems daunting at times but it doesn't have to be. You could make extra money by selling clothes, starting a side hustle, driving for uber, or delivering pizza. All the money you make from these activities should go straight to paying off the loan you are currently focusing on. If you are willing to dedicate time each week, you can even make money using your phone. The more money you make, the faster you will pay off your debt!
No New Debt
Remember when you applied for your credit card or took out your student loans? Yeah, let's not do that again. Stop making the problem worse and increasing your debt. Cut up those credit cards that got you into this mess and do not take out any additional loans. You will never be able to reach your goal if you are constantly taking steps backwards.
Focus
It is important to stay focused and knock out one debt at a time. If you have multiple loans, organize them by smallest to largest and start paying them off one at a time. You should continue to make the minimum payment required on each loan while putting "extra" money towards the smallest one on your list. This is called the snowball method and is what I used to pay off $28,000 in about 17 months.
Remember Your Why
Remember why you started this journey? Always keep that in mind! Visualize how much better you will feel when you wake up in the morning and you don't owe anyone anything. Once you are debt free, the money you make will be yours to start building wealth with. It may even be helpful to create a vision board to envision everything you will be able to do when you are financially free.
What are you currently doing to keep your mind focused on paying off your debt? Your mindset is everything. Establish your goal and make a plan to start attacking your debt!
No comments:
Post a Comment