When it comes to managing your debt and getting it paid off, there really is no magic quick-fix. Having a system and a plan will help you however, but I don’t mean “shuffling” your debt. You can try chasing lower interest rates and moving your balances from card to card, but it doesn’t solve the real problem.
Realize Debt is a Product, Not a Necessity
Debt has been so highly marketed to my generation that it is just sad to me. People who don’t know any better get themselves so leveraged in debt that almost all of their paychecks are going toward monthly payments. A layoff would wreck their finances within a month.
Make a Decision that You Want to Change
When I first graduated from college, my husband and I felt the financial pressure of a similar situation. We made up our minds that we weren’t going to keep living that way. I think making the decision to change is really half the battle. Debt is also something that’s difficult to just “try” to fix. If your heart’s not in it, no plan will work for you.
Cap Your Overspending
You can attack debt on two fronts. The first is to get yourself to the point where you’re living below your means and don’t have to keep borrowing. This can require something as small as eating at home more and packing your lunch to selling the car you have because the payments are taking up a lot of your cash. Doing this is really hard in the beginning, but as you get your finances back on track you’ll be thankful that you did it.
Pay Off Existing Debt
Next you need to have a system of paying off your existing debt. My husband and I got Dave Ramsey’s book “The Total Money Makeover,” which has a great way of doing this. You can read more details in the book, but the idea of paying off smaller balances first and working your way up (called the “debt snowball”) does work. I’m not the spreadsheet type, so the more practical the system the more easy it is to stick with it.
Find Ways to Increase Your Income
A great side-effect of wanting to pay off debt is it made us more determined to find extra ways of making money. Our overall household income has nearly tripled from when we first got married. That is exciting to me because after we’re out of debt, that money is going to be available for us to buy a home, fund our retirement, and allow us to do a lot of good things we couldn’t have done otherwise.
Realize that Getting Out of Debt is a Process and the Advantages of Getting Out of Debt are Worth It.
As I said earlier, mainly what you need is just the desire to get out of debt and the willingness to do what it takes to get you there. For most people it won’t happen overnight, but the rewards are worth it. I think it’s amazing what a person can do when they have their financial freedom, and I’m personally looking forward to it. I hope you put some thought into it and make that decision for yourself as well.