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Debt – It’s a word we despise right? We all either have had a lot of it or currently have a lot of it and don’t know how to get it down whether it’s student loans, collections, credit cards, medical bills, the list goes on! It can be really frustrating if you don’t know how to go about it and don’t have a plan. I recently became debt free and am so relieved! I’m going to share my tips on how to do it as well as a few things I’ve picked up from Dave Ramsey!
The first thing:
The Snowball Method
- This is one of the methods Dave Ramsey suggested that I personally found very helpful. List your debt from smallest to biggest no matter what the interest rate is. If you can pay the small ones in full, do it and pay the largest by making the minimum amount due on those payments even more if you’re able to.
- After paying the smallest debt first, you feel better and motivated to continue tackling the others and they start to disappear one by one freeing up more dollars to throw at your larger debt and loans.
- Using the snowball method is practical because paying the smaller ones you can be debt free in 18-24 months versus starting with the highest debt first which will take longer and after a while you get tired of paying it and lose all motivation.
If You Fall Behind on Bills
- Don’t let the payments pile up. When you get the notices in the mail, take care of it right away. Don’t just toss them to the side near the mail tray.
- Call your creditors which are the companies you owe money to. Let them know what’s going on and make payment arrangements. I had payment arrangements for anywhere from $50 to $100. If I was able to give more, I gave more to pay it down.
If Your Debt is Already at a Debt Collector
- Call and negotiate with the debt collectors. To be quite honest with you, all my stuff ended up going to a debt collector.
- Negotiate with the creditors for a lot less than you owe. For example, let’s say you owe $800 to a creditor, when they call, ask to settle for $400 and pay that right away. Usually after calling you several times, they will offer an option to settle for a lesser amount. TAKE IT! Get it done!
- If you can, set up autopay so you don’t forget to pay it. Sometimes they even give discounts for adding that option. It is very helpful as you know it is already being taken out. In addition, it raises your credit score because your payment history becomes 100% consistently.
Sell Everything You Don’t Need
- Facebook Marketplace, Thred-up, Poshmark, consignment shops – there are many resources to get your stuff you don’t need out there so you can make some cash and pay down some debt. Most of us have stuff lying around that we don’t use and could in all reality live without.
Step Away From Unnecessary Expenses
- Uber Eats, Doordash, Subscriptions, different memberships, unless they are absolutely important, cut them out! I remember one month spending about $850 on Ubereats and doordash alone!! That was utterly insane because that could have went towards my debt.
- The $250 cable bill, cut some of those channels down, shop around and see where you can cut corners on certain bills and things that you pay per month.
Focus More On:
- Consistency
- Keeping your WHY front and center – you want to be able to invest in things, make moves, own a home or other properties and it’ll be quite difficult to do that if you’re in a ton of debt.
- Increase your income
- Cut out unnecessary housing, food and transportation costs.
- Not create more debt trying to keep up with the Jones’
- Tracking your progress big and small
- Sticking to a budget that is effective for you
Tackling debt is not easy, but sticking with it and being willing to crush it knowing what your long term goals are and remembering that money is not just about numbers. You’ve got to improve your mindset all around about it. Saving money and crushing debt come from simple activities.
Remember, action is the difference between NOWHERE and NOW HERE. Get moving, and get debt free this year, YOU CAN DO IT!
Jian says
This is a good read. Gives helpful and practical tips. I like using the snowball method. But sometimes it depends on priorities more than the amount.
renee says
Yes!!! We did the snowball method and it worked wonders for us! Great info!
Bella says
These are such great tips, totally gonna save this to show my hubs 🙂
Harmony, Momma To Go says
wow I am so glad I am a grown up not in debt. I see how easy it is for people to fall down that hole and can’t imagine how hard it is get out of it. I do hear good things about the snowball on social. I guess mentally it makes sense to be getting rid of payments.
Nikki Wayne says
Thanks for the tips. It’s so helpful.
Krysten Quiles says
I definitely need to work on this in 2021. I recently had a very expensive dental procedure and it cost way more than I could easily afford.
Tweenselmom says
These tips are truly helpful. Selling stuff you don’t need is a good tip so you can also earn some money, and yes, pay your bills immediately, because you might forget to.
denise says
I’ve listened to Dave Ramsey a number of times and the snowball effect is so on point. Always start with the smallest debt and work your way up – great advice. Thank you for the post
Irene says
I am really lucky as my unique debt is the mortgage….
Christa says
Yes! Love it, my husband and I started following the Ramsey method about 18 months ago and have paid off so much! Once I pay off my student loans, I am going to be able to quit my job and stay at home. Great motivation! This is the kind of information they need to start teaching in schools and I will certainly teach my children.
Tisha says
This has been a goal for me this year. I’ve been working on it and it’s going well!
Amanda says
These are great tips on a difficult topic! I feel like 2020 taught us all such bad habits when spending money became so easy! We all started ordering delivered groceries, food, clothes, etc. Thanks for sharing!
Mahnoor Khurram says
Love these tips! They seem pretty helpful.
Nadalie Bardo says
YES, I am all for this! Aiming to be debt-free this year as well. Starting to clear out the clutter and sell things on Facebook.
Akriti says
This was so helpful. It can be really easy to fall into debt and keeping track of your bills is extremely important.