Debt. While it’s an unfortunate reality for most of us, I’ve never met a person who actually enjoys it. In fact, most of the people I know and/or interact with absolutely hate debt.
When I think of financial independence, I believe part of that equation entails being debt free. This means no mortgage, no student loans and certainly no credit card debt. When you’re free to do whatever you want with your money rather than send it to others, it’s much easier to accomplish your financial goals.
If you’re currently digging your way out of debt, here are four easy steps to get that much closer to being debt free once and for all:
Get Smart About Credit Cards
Credit cards can be both a blessing and a curse. If used properly (paid off in full each month, never charged over their limit, etc), they can be filled with great perks which include cash back and travel awards. However, left unchecked, they can be a source of high-interest, ballooning debt. It’s not worth the damage to your credit score to let this type of debt linger any longer than it has to–cut up or put away the cards until you’re able to use them in a more responsible, beneficial way.
Make More Money
Find a way to bring in as much extra income as you can and send every dollar of it towards your debt. I’m always looking for enjoyable ways to boost my income; from turning my passions into income sources to managing multiple jobs, all of the extra money I make is funneled to a variety of financial goals.
It’s important to note that as you increase your income, you should continue the same lifestyle you had before—this is not a time to let lifestyle inflation creep up; it’s a time to work yourself out of debt and on your way to financial independence.
Create a Budget
While it’s true that not many people actually enjoy adhering to a budget, it’s an invaluable tool for setting yourself up for financial success. A budget is a fluid, ever-changing entity that can help you track your spending, track your debt payoff progress and help you identify any unnecessary expenses that could be trimmed back. The key to setting up a good budget is to be realistic and honest about the numbers you’re entering for each line item.
Slash the Expenses
As you track your spending, pay attention to items that are sucking up your precious dollars but aren’t truly necessary. Some of the cutbacks I’ve made over the years include cable, shopping for clothing and dining out. I also set goals around cutting my expenses, such as my 2013 goal to cook at least 4 dinners each week and my focus to take my lunch to work instead of spending money in the cafeteria or nearby restaurants. With a bit of creativity, it’s possible to slash your expenses in a way that’s not detrimental to your current quality of life. Once you have that extra cash cushion in your budget, make sure to send the extra money straight to your debt.
By following these four simple steps, you’ll be on your way to a debt-free existence. Imagine how good it will feel to know that you no longer owe anyone another dime!
What are some ways you’ve sped up your debt repayment?
Jen
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These are all good tips, especially cutting ones expenses. Usually there ways to cut your expenses to free up some extra money that you can throw at your debt payments.
Absolutely! It's amazing what even a week of spending analysis can reveal–there are usually always ways to cut back somewhere
I did all of these when working on my debt repayment. It takes flat out dedicated to pay off a lot of debt.
My recent post Overspending in America – The Sad Truth
Yep–there's not much that rivals a true dedication to getting rid of debt!
A good strategy that works on a tight budget is to round your debt payments up to the next round number. At the very least, you're paying a little extra….which over time can take a big bite out of interest payments.
My recent post How Successful People Accomplish More – Two Guys and Your Money 025
Such a great tip! thanks for sharing
Tracking spending to know where it all goes and then budgeting is a huge step. Living in denial doesn't help at all. You have to face the debt head on and throw everything you have at it.
You hit the nail on the head–there's no way I could have dug myself out of debt unless I dealt with the situation head-on. Tallying up the totals can be nauseating, but it's the first step to being debt-free
These are all great tips! Creating a budget is huge! Without one, I don't see how people regulate their spending at all.
I'm the same way-I can't fathom what I'd be doing with my money if I didn't know where it was coming & going
It looks easy and simple when you say it like that! I used to try to find extra money everywhere when months were lean. Sell stuff, help a friend in exchange for a meal or another free thing… No spending plus earning more did the trick quickly.
My recent post 13 money resolutions for 2013: #11 give back!
Hahaha…doesn't it? The key is remembering that with a dedicated approach and a whole lot of effort, it really does get easier as you go!
Budgeting and tracking expenses has been the crucial key for us. We've worked hard to cut our grocery budget in half, and it's been well worth it. Thanks for the great post!
Wow…cut in half–that's awesome! Keep up the great work!
As they say, we should not spend more than what we earn so that we will not drown in debt.
Exactly!
When I finally realized that debt was a bad thing I was lucky enough to have only racked about $2500 in credit card debt. I started throwing all of my extra money on that and became a challenge to me to see how fast I could pay it off. One I built up some momentum I was unstoppable.
My recent post Why I Disagree with This One Piece of Advice from Dave Ramsey