Let’s face it, you have a problem. And debt free living is the dream. You may think it’s too far fetchedto actually become debt free. I hate to rain on your parade, but it’s not. There’s a few things that are stopping you from achieving this though …
You either:
1. Have a spending problem
2. Have a student loan problem
3. Have a problem keeping up with the Jones’s
All of those three problems mentioned above leads to one very big problem: Your Nasty Little Debt. (which may actually not be that little!)
If you’re here that means that you obviously want to get rid of this nagging problem that follows you to your nightmares. Lucky for you, you savvy saver, there’s a simple 5 step process that will knock your socks off (well … knock your debt off ….)
Disclaimer: This process works, but only if you work. Yes, you actually have to do something. It isn’t going to magically disappear, no matter how much you wish it did.
In those post I will go over the 5 steps you need to take to start your journey of debt free living.
Bust those Myths
1. The first and most important step in this process comes from Dave Ramsey’s money myths. I only share a few, but you can find all his money myths and plans in his book, Total Money Makeover
(affiliate).You have got to stop what you’re doing and change your mindset about debt. Because obviously, how you’re handling debt now isn’t working.
By changing your mindset and uncovering the truth about debt can help you to make better decisions in the future and give you that drive you need to completely pay off all that stupid debt. The sooner you come to terms with the truth and the fiction when it comes to debt, the sooner you will be happily debt free and soaking up the sun in Hawaii on a family vaca.
Set up for Success
2. After you come to terms and figure out debt is bad, you’re going to need to evaluate your debt and make a plan. Some people know how much in debt they are, and others just ignore it. Stop it. I know you feel guilty when you see that number. Stop feeling guilty and start getting hungry to pay off that debt even faster!
You need to list out all of the debt you have, big or small, anything owe. Then use the best method to pay it off, the snowball method. This is the easiest method so that you don’t give up. If you know you’re going to feel overwhelmed when tackling your debt you need to use the snowball method.
Wait … what is the snowball method? To start you need to put your debts in order from smallest to largest. Then simply pay off your smallest debt first and continue in that order. Each time you pay one off you’ll find you have money left over (from the last debt you paid off) to put towards the next debt, and so on. Hence, the snowball method!
How much money goes to debts?
3. You’ve busted some myths, found out the easiest method to pay off your debt, now you’ve got to figure out HOW MUCH to actually put towards your debt. You can’t expect it to be paid down automatically. (Unless you have it on bill pay, if you do that’s fantastic!) You still have to pay for everything else at the same time you’re paying down debt. How do you do that? By simply finding out what percentage of your income is going to all of your expenses.
Typically, you should be putting 7% towards your debt every month. Find out if 7% of your income is actually going to your debt. If not, something needs to change.
But wait …. If you’re really, truly serious about debt free living then you’ve got to start acting serious. By acting serious I mean any extra dollar you find is going towards that debt, not towards Starbucks. Anything you can put towards paying down your debt is a huge step in the right direction. You’ll be living debt free so fast you won’t even remember what it felt like to have debt! (But, you need to remember so that you don’t fall into the debt trap again!)
Get to it!
4. Start paying it off! You’ve got your plan on how to become debt free, now you need to implement it. Like I said in the step above, if you’re serious about being debt free you put all you have towards paying it down.
One sneaky trick to help you be avid about paying it off is to automate your bills. I know it’s something that can be scary for some people, but it truly helps. Not only will you never forget to pay another bill, you’ll always be motivated to find ways to keep money in your account.
Getting Serious about Debt Free Living
5. Speaking of keeping money in your account, that brings us to step 5. I know that most of you are probably like, “Hold up, Kenz! You’re making this sound so easy when it’s not. How do I even find extra money to pay it off?!”
I’m so glad you asked! This is my specialty expertise, finding your money!
You know those people who are always complaining that they don’t have enough money. Okay, who I am kidding, that’s most everyone! The problem with that is that most people actually DO have the money, and plenty of it.
Well then where the crap is my money?!
It’s all in your expenses. Before you give up, hear me out.
The problem is that everyone tends to think they need more money coming IN. They don’t ever look at how much money is going OUT. Yes, it does help to make some extra cash on the side and I totally recommend doing this if you can to pay off your debt.
But, what if there was an easier way to get that money without having to do any extra work?
It’s all hidden in your expenses. Every last penny has to go somewhere, and more than likely it’s going somewhere that it doesn’t need to.
When my husband and I decided to become debt free and start saving for a down payment on a house we quickly figured out that we needed more income. We had it all backwards. We didn’t even pay attention to how much we were spending on EVERYTHING. I’m not just talking about buying Starbucks every day, spending a little too much at the mall, or even indulging on the new restaurant in town. We were spending too much in every area like our home, insurance, car, utilities and even groceries.
Once I figured out that you could reduce your expenses, WHILE STILL LIVING A LIFE THAT YOU LOVE, all that income comes right back to your bank account. It becomes so much easier to pay off your debt, put money in savings and not stress about paying the bills.
We don’t even have to stress about paying our bills anymore. You know the best part? This is all on an income of less than $40,000.
I know you’re thinking, “There’s no way we could live on that much, all the stuff I buy is necessary.” I thought that, too. Yes, most families do need more than that and most families are making more than that. But, reducing our expenses is what has helped me, and countless others, to seriously pay off all our debt.
Now you’re thinking that this sounds all fine and dandy but you have no idea how to go about handling all this. You’re about ready to give up because you feel that debt free living is a hoax and no one is truly debt free. (I’m living proof that it’s not a hoax, by the way.)
Because I want you to know that you can become debt free and start living a life that you’re happy about, I’ve made an in-depth mini course for you to take. Oh …. and yes …. the course is free. 🙂
In the course I go through every step we talked about above in even more detail so you can personalize your plan and start getting serious about paying off debt.
To sign up for this free 5-day mini email course just click right here.
What are you doing to become debt free?
