I changed my mindset about debt and it changed my life. Now, I want to help you change yours.
First, you should know:
- I understand what it’s like to be in debt
- I understand how to get out of debt
- I understand what it feels like to pay off debt
I can help you. You owe it to yourself to be debt free. You weren’t meant to just pay bills and die.
I got into debt from going to a private undergraduate university and then to law school. I started with $206k in student loan debt, and I’m down to $120k. I’ve paid off $86k and counting.
I can help you navigate the process of becoming debt free. By getting out of debt, you are setting yourself up for financial independence, wealth, and freedom.
My plan for you is to:
- Learn why you need to get out of debt
- Create a plan to get out of debt (12 steps — see below!)
- Implement and monitor your plan
Here is what I recommend you do to get started.
FIRST: Learn Why You Need to Get Out of Debt
If you have debt and you want to be financially well off, you need to understand why you got into debt and why it’s important for you to get out of debt.
It’s easy to skip this step because but I really encourage you to pick one book or post and read it. Get started on your personal finance journey so you actually understand money and debt. It’s worth it!
- Read The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey
- Read Secrets of the Millionaire Mind by T. Harv Eker
- Read What’s So Bad About Debt Anyways?
- Read The One Reason You Should Make Paying Off Your Debt A Priority
SECOND: Create a Plan to Get Out of Debt
Creating your own plan to get out of debt means that you need to understand how to set financial goals, how to budget, and have a basic understanding of personal finance. Getting out of debt requires you to create your own get-out-of-debt plan. It’s not easy. But the payoff is worth it.
You can live the life you’ve always wanted — debt free. Here’s my 12 step plan for you to get out of debt:
- Evaluate your debt. Take inventory of the debt you have. Write down the details and get organized.
- Set a goal with a deadline for when you want to be debt free. Set a hard deadline for when you plan on being debt free. This will make the goal an actual goal and not a wish.
- Make paying off your debt your number one priority. Prioritize paying off debt above everything else. Give yourself daily reminders that this is your focus. It iwll make saying no to thing easier, which you’ll ultimately have to do because you can’t do everything. Make debt repayment your number one priority.
- Decide which debt you want to payoff first. Choose either the highest interest rate debt, or choose the smallest debt to repay first. It’s up to you, do whichever makes you feel better.
- Pay the minimum payment on all debt except the debt you’re paying off first. Make sure you only pay the minimum payment on all your debts except the debt that you’re focused on paying off first. Pay as much extra to that one debt.
- Automate your payments. Automating your debt repayment will make the process easier for you because you won’t have to choose whether to spend the money on something else — it will happen automatically. This is a hack that can help you achieve your goal – don’t underestimate it.
- Get on a written budget. A budget will help you understand exactly where your money is going each and every month. This is really important when you’re focusing on getting out of debt.
- Cut expenses. To get out of debt faster, focus on cutting your expenses as much as possible. This will allow you to put more money onto your debt and speed up the process.
- Earn more money. Find ways to make more money so you can get out of debt even faster. Get seriously intense about increasing your income in the name of your debt (that’s what I do for my student loans)!
- Put all windfalls toward your debt. Decide ahead of time that you will put extra money on your debt. If you receive a bonus, a raise, or a gift, put that extra money onto your debt. This will really help decrease your debt even faster than you expected.
- Avoid getting into more debt. While you’re getting out of debt it’s really important that you don’t get into more debt. That’s why I recommend knowing why it’s important to get out of debt before you start your plan. If you don’t address the underlying problem, then it will happen again. For example, if this debt is credit card debt, stop using credit cards. You know what’s the wise choice for you, so listen to your gut.
- Celebrate small wins along the way. As you put your plan into action, celebrate small wins along the way. Go out to dinner, or buy yourself a small treat — whatever it is that will help you feel celebrate for your success. It’s important to remember that you’re doing a good job and this is a marathon, not a sprint.
- Signup for a free account with Personal Capital to track all of your income and spending with your budget
- Read A 5-Step Guide to Setting Goals for Beginners
- Read How to Budget for Beginners: A 6-Step Guide
THIRD: Implement and Monitor Your Plan
Creating a plan to get out of debt puts you on a path toward becoming debt free. However, over time, life happens — things change. You need to monitor your plan. Have budget / money meetings and check in every so often (I prefer weekly, but you can decide if monthly or some other interval is better). The point is to keep your goal in front of you, commit to it wholeheartedly, and reap the rewards of financial freedom.
- Read 10 Strategies To Help You Succeed When You’re Getting Out Of Debt
- Listen to Dave’s Ramsey’s podcast The Dave Ramsey Show on iTunes or another podcast app
It’s easy to feel motivated initially to get out of debt, but the road can be long and tiring. Keep yourself motivated. Give yourself rewards for small wins. Stay focused and no matter what, keep going.
A Final Note
I believe everyone needs to get out of debt in order to build a strong financial foundation. This process takes time. Like Dave Ramsey sasy “get mad at your debt!”
I am cheering for you!