If you have credit card debt, student loans, medical debt, and/or car debt.... you are not alone. Unfortunately, it is really common in America today to have an overwhelming amount of debt.
Actually, debt is about as common as a Pumpkin Spice Latte in the Fall. But debt isn't as sweet as a Pumpkin Spice Latte, is it?!
I recently went on Cleveland's New Day Cleveland to talk about this topic as well. You can view my segment here!
Why Do We Pay Off Debt?
When I talk about paying off debt, I like to start with talking about why it is important to pay it off. Since it's so common, many people think that it's not a big deal. Why pay it off when it seems like everyone has it?
There are many reasons for this but I want to share two reasons that I feel are really important.
The first is that debt causes a lot of stress! Life is stressful enough with all that we have going on... we don't need the added stress that debt brings! If you have debt, I am guessing that in the back of your mind you are always thinking about money. "How am I going to pay all the bills this month?" "What happens if we have an emergency?... how will we pay for it?" "When is that bill due and when will I get paid next?"
Paying off debt means that you don't have to constantly be stressed about those things anymore!
The second reason is that debt keeps you from achieving your goals. If you have debt, you may feel like you don't have money to save for retirement. We are all going to retire, so it is important that we save now for later in life. Paying off the debt will free up your income so that you can have room in your budget to be able to save.
Having debt also keeps people from being able to take the vacations they want to take, leave the job the hate, be able to be generous, and so many other goals.
How To Pay Off Debt
The first thing you have to do is know exactly how much debt you have. If you don't know how much debt you have, it's likely because you find it too overwhelming to look at the full picture. What I have found is that often times we think it is more overwhelming than it actually is. Taking a look at all the debt you have allows you to make a plan to be able to pay it off.
Once you know how much debt you have, here are the things that will help in creating a plan to pay it off.
Budget. Having a budget, where you plan for where all your money is going to go, is a must. This is the only way you will know what all your expenses are so that you are able to see if you can cut back on anything in order to have more money for debt. Having a budget is also the way you will plan for the amount of money you can pay on debt every month.
Use the Debt Snowball. The debt snowball is where you list your debts smallest to largest and pay them off in that order. The quick wins that the small debts give you, encourages you that it IS possible to pay off debt.
Cancel Subscriptions. Do you have subscriptions that renew automatically? Do you use them anymore? Have the prices increased? It is always good to go through your bank account to see what subscriptions are coming out. There may be ones you can cancel and that will save you money that you can then use towards debt!
Shop your insurance. If it has been awhile since you have shopped your home owner's insurance (or renter's insurance) and car insurance, you may be able to save a significant amount of money by shopping with an independent insurance agent! Independent agents can get quotes for you from a bunch of different insurance companies. In doing so they are able to help you find the best rates available.
Whitaker-Myers* is an independent insurance agency and they would be happy to help you with shopping your insurance needs!
Sell Stuff. This is something that so many people over look. Many people feel like they don't have anything that is worth selling or that they won't get much money from selling stuff. What I have seen is that it is amazing the things you can sell! Also, it is often the small purchases over time that gets people into debt and it works the same in reverse. The $20 or $30 you will get from selling things will help you to start paying off debt.
Extra Jobs. Of course you can always pick up an extra job at a coffee shop or restaurant but there are so many other ways to make money on your own time today. You can do freelance work such as writing, digital marketing, or website design if you have those skills. If you travel a lot for work, maybe you would be interested in renting your house out on Airbnb? Or maybe you could drive for Uber or Lyft? Of course with both Airbnb and Uber or Lyft, you need to use caution and your own judgement but it could be a way to earn extra money if you feel comfortable.
The key to paying off debt quickly is finding ways to throw extra money at it. The sooner it is gone, the sooner you can work on the financial goals that are the most important to you!
It's going to be hard... but it's worth it!
Dave Ramsey has often said that when you are paying off debt, if your friends are making fun of you... you are doing it right! I believe that is true. As we said in the beginning, debt is normal and if you try to make changes to your lifestyle to pay it off, your friends and family might wonder what you are doing.
Paying off debt is hard work. It takes discipline and dedication. But it is worth it! That's because once you are debt free, you will have room in your budget to achieve your most important financial goals such as saving for retirement!
You can do this! Good luck!
*Insurance products offered through Whitaker-Myers Insurance Group and licensed agents.