When you first decide to get out of debt, it’s common to spend a bunch of time analyzing your debts and trying to figure out the “best” way to pay them off.
Should you pay a little bit extra to each one every month? Should you focus on just one with the debt snowball method? Use a debt avalanche? Reduce your interest rates?
People sometimes spend MONTHS trying to decide.
But there are two things that matter a whole lot more that you have got to do if you want to get out of debt and stay out.
(One’s something critical that so many people forget to even think about, let alone do.)
Ready for them?
1. If you want to get out of debt, you have to stop borrowing.
It sounds so simple, doesn’t it?
Sometimes people actually laugh when I say that, because Captain Obvious here, right?
Except it’s not.
I can’t tell you how often I borrowed on one hand while struggling to pay off debt with the other, never realizing what was actually holding me back. And I was by no means alone.
So many people tell me that they “have” to borrow for emergencies, travel, the holidays, car repairs, you name it while they’re paying off debt.
They are so used to using debt as a solution, that they don’t even realize they have other choices. (A lot of this is a mindset change.)
Remember, debt is not a solution. It’s a problem.
You have to quit borrowing in order for any get out of debt method to work.
So quit borrowing money, make the payments on the loans you already have, and eventually you WILL get out of debt (as long as you’re at least paying enough to knock out a little bit of the principal too.) Truly.
Remember, when you’re in a hole and want to climb out, the first step is to put down the shovel. Quit digging, prevent more earth from falling in on you, and then figure out how to climb out.
How to quit digging yourself in deeper.
Having a support group of like-minded people and clearly defined goals helps to get rid of your debt.
In other words, you’ve got to know what you want (to be debt free), why you want it (less stress, a better future, [insert your reason here]), and you’ve got to talk to other like-minded people who are going through the same thing.
While you can quit debt cold-turkey and without any outside help (and I highly recommend quitting debt cold turkey!) it helps to know that you’re not alone.
Talk with others who have done it or have seen successes in their journey so far. It helps to hear “great idea on buying that beater!” instead of “isn’t it time to buy a new car?”. Or “Hey, want to come over for game night?” instead of “Oh come on, let’s go out to eat tonight at that new restaurant!”.
It helps to read debt stories from others who’ve been there, done that, and gotten the coveted “I’m Debt Free” t-shirt.
If you’re married or in a relationship where you share money, of course it also helps immensely to be on the same page as each other. It’s hard to get out of debt when you’re frantically trying to climb out of the hole but the other person is pouring dirt in on top of your head.
2. Stick to your guns.
Once you decide to get out out of debt, you have to keep going until you’re done. Stick to your guns and get it done.
You can’t give up when life throws the inevitable curveballs at you. You can’t give up when you’re tired or feeling desperate.
You have to keep going. (Get help along the way, too.)
Have fun along the way too, because you’re in it for the long haul and it may as well be fun. Stay committed, and you will get there some day. It will be so worth it!
Know that you CAN do it, given enough time. Set backs are normal and no fun, but you will get through them. You can learn from mistakes instead of beating yourself up. You can plan for future emergencies.
Revise your budget until it works. Earn extra money and maybe cut back on expenses. And have a backup plan.
A backup plan helps you succeed
Of course, we all need money for things, and we can’t just magically throw all our money at debt and be done, especially when there’s an emergency. That means that we’ve got to have a backup plan so that we can successfully quit borrowing money.
In financial terms, that backup plan is often an emergency fund. (If you don’t yet have one, here’s how to get started. Aim for a thousand dollar emergency fund for starters — or whatever you think you can scrape together. ANY emergency fund is better than nothing.)
Making sure you have money available when you need it also means budgeting. Start planning ahead now for all of the types of expenses you’ll encounter: regular, irregular, and even the unexpected. (You may not know WHAT unexpected expenses will come up, but you can be sure something will. Start expecting the unexpected.)
The most important thing to remember
The most important thing when it comes to quitting debt is remembering that there are always alternatives to borrowing.
It’s just up to you to find them.
That gets easier with time, and with smaller successes. Stick to your guns on this most important step, and you absolutely will get out of debt.
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