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How to be Proactive About Paying Off Debt
Anyone who is in debt wants to be free of it, who can blame them right? Just about everybody has the means to get themselves out of debt. So why are so many people still buried under a pile of bills?
The problem is that most people are not willing to do the work to make it happen. That might seem like a harsh statement, but in a lot of cases it’s true. It takes a lot of determination to commit to getting rid of your debt.
Not only does it take determination, it also takes a long-term commitment, depending on your situation, it could be years. Which means you need to keep up the fight for as long as it takes to get it done.
Just the thought of how much work needs to be done can be very overwhelming. The key is to constantly keep moving forward and to keep your eyes on the prize. Every little step you take to get rid of your debt will pay off. It might not seem like it right now, but it will as long as you keep it up.
Here are some ways to help you take the steps you need to commit and stick to repayment plan and finally rid yourself of that debt monster.
Create a Minimalist’s Budget
Create a budget, or rework your existing budget to maximize your debt repayment strategy. Look at every little item on your budget and get rid of any items that are not essential. And any ways you can save more on other essential items such as groceries.
Don’t worry, this is temporary, you can add items back in once your debt is paid. Or, you may realize these things just weren’t as important than you thought they would be and don’t need them anymore.
Set a Payoff Date
Now that you have whipped your budget into shape, you have a better idea of how much money you can dedicate to your debt repayment plan. Take your total debt amount and divide it by the amount you are able to throw at your debt each month. This will give you the number of months it’ll take to get rid of your debt.
The number of months won’t be an exact date since interest rates and such were not used in the calculation. But it’ll give you a good idea. Write that date down somewhere and when things get you down, remind yourself that there will eventually be a light at the end of the tunnel.
Decide on a repayment plan
Two of the most common methods are the “Debt Stacking” method and the “Snowball Debt” method.
The Debt Stacking method is done by attacking the debt with the highest interest first. Once that is paid you stack the amount to the minimum payment you are making on the next highest interest debt and so on until you are debt free.
The Debt Snowball method is where you attack the debt with the lowest balance first. Once that is paid you stack the amount to the minimum payment you are making on the next lowest balance debt and so on.
Personally I prefer the Snowball Debt method; although the Debt Stacking method will save you some money on interest in the long run, you see results faster with the Snowball Debt method. Just seeing the results of having one debt paid off seems to be so encouraging and will help to keep on going.
Find creative ways to make extra money to help move things along quicker. The more you do, the faster you will get that monkey off your back. Now that you have a plan of action, here are a few posts with ideas on how to bring in some extra income and help kick your debt repayment efforts into high gear.
Please leave a comment if you would like to share your debt free journey.
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