02 Mar Five Ways to Eliminate Debt Faster
Building Momentum with your Debt Elimination Plan
It’s no easy task to get out of debt. It’s a lot of hard work and it takes a long time for most people. Because there are only so many paychecks in a month, it takes a long time to see results. It’s easy to lose hope when it takes so long to see meaningful results. Speeding up the process can rejuvenate your focus and help you stick with your plan. There are many ways to eliminate debt faster so you can keep the momentum. Whether you have high-interest debt like a credit card or a private money loan from a hard money lender, we are going to cover five ways that you can eliminate your debt quickly.
Get strict with your spending
You’ve probably already cut back on some spending, but have you gotten really intense with it? Get extreme and scrutinize every dollar you spend. Every extra dollar you can throw at your debt balance helps you eliminate debt faster. It may seem like a few dollars here or there won’t make much of a difference. When you add up all those “here or there” moments, you’d be surprised how much difference it actually does make. Just saying no to a few sodas a week can add up to $10 a month pretty quickly. Staying home instead of eating out can save you $5-50 per meal, depending on where you normally eat and how big your family is. If you buy necessities with cash like we do, saving the change in a jar can add up to $10 or $20 pretty quickly too.
Add all these things together, and most families can scrape together $50 to $100 a month in extra money that they can throw at their debt. That’s enough to knock a few months of payments off a credit card balance or car loan, which then frees up former payments so you have more money to attack your debt with. Before you know it, that $50 a month is saving you hundreds (or even thousands) in future payments.
Downsize your lifestyle
I’ve often heard of older couples downsizing the house when the kids are gone. Downsizing is something I always felt only applied to older people, not “young” people like me. The truth is downsizing applies to anyone looking to save money. But since downsizing can have such a negative connotation, let’s call it simplifying our life instead. Doesn’t that sound better? Start with questioning the little things. Do you really need the expensive name-brand groceries or clothes? Do you need to eat out as often as you do? Could you get by with a smaller house or a less expensive, more fuel-efficient car?
What about vacation? Do you have to go on vacation or can it wait for a while? When we were getting out of debt and establishing our emergency fund, we didn’t go on a family vacation for several years. To this day we have yet to do an elaborate vacation like spending a week in Hawaii. We choose to take smaller vacations that allow us to create lasting memories for the kids without spending thousands of dollars.
Sell your toys
This is a hard one to pull the trigger on. I mean, we LOVE our toys. Especially we men. But if you truly want to get out of debt quickly, you’ve got to make some serious sacrifices. If you’re one of those who has accumulated debt by buying boats, cars, jet skis, ATV’s, campers, or any other big ticket items, this may be the time to cut the anchors loose. Particularly anything with a loan and especially anything that isn’t necessary. Amputate the debt at the source of the bleeding – the loans. Nothing improves your cash flow like eliminating your biggest source of cash outflow.
Not only does it improve your cash flow, but it simplifies your life as mentioned above. Saying goodbye to those material possessions helps you learn to appreciate the fewer things you own. When you develop an attitude of gratitude, your whole perspective on life changes. Try it for a while. You can always go back in debt if you don’t like living without the toys. 🙂
Get another job
Nobody likes working two or three jobs. But nothing accelerates your debt payoff like having more income to pay down the debt. You see, you basically have two options to eliminate debt faster: you can cut your expenses or you can increase your income. Both can have an impact on your debt payoff timeline by themselves. If you want to get serious traction, you have to do both together.
Extra income can take on many forms so you have lots of options here. Part-time jobs, contract & temp positions, odd jobs around the neighborhood, nighttime jobs or weekend jobs, you name it. You can deliver pizza on the weekends and make some decent cash. You can donate plasma and make a few hundred bucks a month. If you have computer skills, you can do some work at home as a virtual assistant. You can learn some new skills and offer your services to people or businesses you know. You can do some mystery shopping.
There really is no limit to the potential here, other than your own physical ability and ability to keep up. When you focus on the end state of being debt free, you can muster up some pretty incredible energy. Especially when you see those paychecks coming in and the debt levels dropping!
Cut the cord and disconnect
Now I’m just talking crazy, right? Well, how badly do you want to be debt free? I absolutely love my iPhone and data accessibility. I really like watching my favorite shows on cable channels, too. But our family’s cable was costing us $90 a month. And our smartphone plan costs us another $150 each month. That’s almost $3,000 a year we’re spending on things we don’t really need. Now that we’re debt free and have a good income, I don’t mind paying for the convenience of a smartphone. As it turns out, I don’t use it all that much but it’s so nice to have when I need to write a blog post while sitting at a weekend volleyball tournament (like today).
But is it worth it the cost? We cut the cord on cable a few years ago and couldn’t be happier. We also went through a length of time (several years) without cell phones. It wasn’t nearly as difficult as you might think. The internet might be a little tougher but there are still options like public internet access. It just isn’t as convenient so it requires some planning. Not exactly the end of the world.
So cut the cable, cut the cell phones, cut the internet. Practical? Maybe not completely. Doable? Yes. Painful, yes. Saves money? Yes. A LOT. Gets you out of debt faster? You bet it does! Way faster. How bad do you want to be debt free?
Stop Digging Deeper
This is yet another really sensitive subject for many people: Cut up the credit cards! Just having the card in your wallet or purse creates a temptation to use the card. You can’t eliminate debt if you’re creating more debt at the same time. Every time you use the card you’re borrowing more money. That creates yet another opportunity for you to get deeper into debt if you don’t have enough money to pay off the card. It’s a slippery slope that can take you deep into a downward spiral. Sounds pretty dramatic, doesn’t it? As a financial coach, I saw way too many families following that exact pattern. Based on that experience I’m not being dramatic at all. Just telling it like I saw it for years.
There are many techniques for getting out of debt faster. You can choose one of the above or find your own magic formula. Whatever you choose, remember to track your progress so you have a visual way to see your success and maintain motivation. And no matter what, keep your eyes on the prize! Don’t give up until your debt is gone. You’ll be amazed how good it feels to be rid of that burden.
We’d like to know what you think! Have you struggled to keep up the momentum with your debt-free journey? What things have you done to eliminate debt faster? Share your tips by leaving a comment!