5 Baby Steps to Kicking Debt in the Face
Are you tired of sitting on loads of debt? I do not blame you. I once was nearly $10,000 in debt with a job that helped me live paycheck to paycheck-without much to spare on paying off that debt. I was an LPN going through a rough divorce from an ex-husband who rang up my credit card on car parts, and I was basically on my own without the financial or emotional support of any family members.
All I had was me, myself, and I to help me survive. It was not easy, but I made it. It took around 5 years to clean up the damage, but I am so excited to announce that today, I am debt-free!
How does it feel? Weird.. because I was used to living on stacks of bills for so long.. But better than ever. I know it may feel like your debt will never go away, but I can tell you one thing-if you quit making new debts, you can start seeing a dent appear.
Here’s how I kicked my debt in the face:
Stop creating new bills. If you are alone and have zero help, you might need to create new debts in order to survive. I remember for the longest time, my credit card actually saved me. Without it, I would not have been able to make it. However, once you can get to a place where you no longer need that card and can make your ends meet by using your weekly check, then STOP. By halting the use of your credit cards, there will be no more debt to pay off, right? Now, you will FINALLY have a number and a goal to work towards paying off. You can finally make a plan.
Figure out how much you owe and whom you owe. Now that you have completed step 1 above, you can make a list of all of your debts and how much you really owe these companies. Write it all down from least to most expensive debts. You can gather all of your statements from the bank or any letters you have received in the mail. But do not forget about interest rates and that these numbers will change every month there’s money to be owed so please take that into account. Know your interest rates!
Choose your method. There’s many methods to getting rid of debt. Remember how I mentioned to list your debts from cheapest to most expensive? You can either pay off your least expensive debt or pay off your most expensive debt first. Or you can choose the debt with the highest interest rate being charged every month. Personally, I love Dave Ramsey’s Snowball method which talks about paying off your smaller debts first then stepping up to the next largest debt. Choose which method works best for you and your family and remember that as long as you are paying off your bills, you cannot go wrong with how you choose to do it… as long as the job gets done!
Cut where possible. There are ways in which we can cut extra expenses-even when we really do not want to give up the things we should be giving up in order to pay off our debt. There are little and big ways to cut your expenses. Maybe it’s your cable that you need to say good-bye to each month. That $100 could really help you with your debt! Or even cooking at home versus going out to restaurants all the time. Or maybe it means something bigger such as downgrading to a cheaper car or home. To find out where you can cut to save money, make a list of every place your paycheck goes: gas, car, home, groceries, gym, movies, dinner, internet, phone, cable, whatever. Now, you decide what you can make cheaper or completely eliminate. Yes, I know it is hard, but please know that this is only temporary.
Know your credit score. It doesn’t sound very important, but your credit score determines who and what companies are willing to give you a loan in the future. Yeah, a loan is another form of debt. However, unless you have $150,000 in cash to drop on a home or $30,000 in cash to go buy a new car, you might want to start working on your credit score now so that you may have the things that you want later on-after paying off your extra debts, of course. Good credit also means lower interest rates when taking out a loan. So when you go get that new car or purchase that new home, you won’t be paying out the ass to even be able to borrow that money from the bank. Interest sucks. It means you are basically paying money to borrow money. So the more you can improve that score, the more you can minimize your interest. Having little or bad credit can also turn you down for little things such as trying to get a new cell phone or applying for an apartment. Not only that, most potential employers will also run a credit check on you and a negative score can keep you from getting a job. See how having good credit is so important? So what’s a good score? A good credit score is typically 720 and higher. Download the Credit Karma app (it’s 100% free) which allows you to check your credit score as often as you would like-without harming it. Here’s an example of my current credit:
If you are currently drowning in debt, I KNOW how hopeless you may feel. TRUST ME. You may think it is nearly IMPOSSIBLE to pay off any of it, but with baby steps, you CAN DO IT. Especially as your life gets better and as you get out of your rut. If you have any questions feel free to contact me!
Your trainer and friend,
